Reducing Your Business Property Taxes

Business.com / Accounting / Last Modified: February 22, 2017

Many complex issues can affect your business property taxes. If you're like most small business owners, you probably don't have ...

Many complex issues can affect your business property taxes. If you're like most small business owners, you probably don't have the manpower or the expertise to keep track of all those issues. As a result, you may be overpaying on your business property taxes — to the tune of thousands of dollars per year. Fortunately there are several simple steps you can take to reduce your property tax payments. One of the first steps in minimizing your tax obligation is scheduling an assessment of your property. When you do, keep the following in mind:

  1. Even if commercial property values in the local market are rising, taxes at every business property are based on an individual assessment and history and may not increase as much as other adjacent businesses.
  2. After you receive the new property assessment, check with an assessor to determine if the market value compares accurately with the assessment.
  3. Another option is to ask your personal banker to see if he or she can appraise your property and compare that to the local tax collector's assessment.
  4. Local tax collectors have been known to hike commercial property taxes beyond what the market dictates, so there is precedent for challenging assessments.

Assess your assessment

Determine whether the assessed value of your business property fits the current market conditions.

Compare your assessment to neighbors

Find out what other businesses in your area are paying to see if your taxes are in line with theirs. You may have grounds for an appeal if you're paying more than your business neighbors.

File appeals

Call your local tax office to ascertain exactly how to file an appeal. Some cities have 311 numbers that can direct you to the right office.

File appeals for business personal property

Sometimes, you can reduce business property taxes through a business personal property tax appeal. This involves the valuation of equipment, furniture, computers and inventory.

Analyze additional factors

Several things can affect your property taxes, such as income and expense statements, market capitalization rates, replacement costs, costs of environmental cleanup and more.

Consider a cost-segregation analysis

Cost segregation studies identify various components of your building that may be eligible for accelerated tax depreciation. By reclassifying certain assets in this way, you may see significant savings in your property tax obligations.

Use software

Using a property tax software program can help you root out possible reductions and facilitate the appeal process.

Ensure proper zoning

Tax rates are linked to the various zoning classifications so it's a good idea to contact your local state tax office to ascertain if your zoning classification is accurate.
  • When you receive your annual commercial tax assessment, if you question it or are going to file an appeal, don't delay. In some states, you have only 60 to 90 days to file or lose the right to appeal.
  • Remember that several factors can influence a change in commercial property taxes including a change of ownership or new construction.
  • Ascertain whether your business is located in a designated empowerment or technology zone, which can reduce commercial taxes.

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