A large range in assessed value for business personal properties (BPP), makes it possible to receive significant tax reductions on property taxes. It is common to find the assessed value for BPP accounts for similar properties to vary by as much as 5,000%. Computers and furniture can be sold at prices of $1-50 per square foot, for businesses located within the same office structure. Appealing BPP assessments can be done by appealing either market value or unequal appraisal. Given the inequity in BPP assessments and the subjective nature of appraisal of BPP homeowners have a high probability of success by being prepared properly for a BPP appeal. Market value as well as an unequal appraisal should be challenged.
Market Value, Book Value & Comptroller Schedule
BPP can be defined using three commonly used methods including book, market, and Comptroller's Schedule. Market value is defined by the section 1.04(7) of the Texas Property Tax Code that states:
Market value is the amount at which a property could be exchanged for cash or in the equivalent in the current market conditions. This applies if the property is (as) publically listed for sale on the open marketplace with reasonable time for the seller and the buyer to purchase it.
(b) Both the buyer and seller are aware of possible uses for the property, as well as the enforceable limitations.
(c) Both the sellers and buyers are seeking to maximize their profit and each is not in a position take advantage of the needs of the other.
Let's take a look at the difference in price between market, book, and Comptrollers ' Schedule. The BPP for the typical motel room comprises things like linens, bedding, window air conditioning unit, towels and a TV. These kinds of items would likely be sold at 10% to 30 percent below the original cost according to their market value after one year. Based on federal depreciation tables and tables, book value is an amount that is equal to 80% of the purchase price within one year. According to the Texas Comptroller's Schedule, BPP for motels has an average life expectancy of 8 years, with a 10% depreciation over the first seven years. Thus, the Comptroller schedule shows that the one-year-old hotel furnishings are valued at 90% of their initial purchase price. This is not compatible with the market value.
Inventory
There are numerous controversial issues in the field of inventory assessment. These include shrinkage and damage, functional obsolescence economic obsolescence and functional obsolescence. How much does a product cost when it is returned after Christmas and before January 1st? (the date for valuation) In many instances the value of returned items is lower than its cost, as it is often damaged, opened, lost pieces, or is otherwise not popular. The market value of inventory is important in determining its assessed value in relation to Texas BPP tax.
Unequal appraisal
Assessed values for BPP accounts often vary from ten-times up to fifty-times on the basis of square feet for companies in the same sector. For example, real-estate brokerages, which have 10,000 square feet of office space could have assessments that range from $10,000 to $5000. It is unlikely that the furniture and computers in the office of one brokerage are 50 times as valuable than those belonging to a rival firm on an individual basis per square foot.
Appraisal districts tend to accept the assessed value provided by https://pbase.com/topics/thornelail/zocnvit214 homeowners. Large companies often use lists of fixed assets. Appraisal districts make use of the cost basis information as well as the Comptrollers schedule to determine the "market value" for the property. The valuations associated with these rendered accounts typically significantly alter the value of these properties. Owners who do not render will have their values at the lower end of value. Although it could seem obvious that appraisal districts will penalize owners who don't render their services, by increasing the value of their assessed property, the reality is quite the opposite. Appraisal districts tend to reward owners who do not render by leaving their assessed values at modest levels. This discourages property owners from rendering. This also creates unfair taxation on the property owners who create an inventory of fixed assets. These reasons have resulted in the BPP to have a large variation in BPP assessed valuations.
How to Appeal an Unfair appraisal
Contrary to what many believe, you are able to appeal BPP by using an appraisal that is not equal. This is an incredibly new concept. Property tax consultants and large owners of properties have not utilized an appraisal that is not equal to BPP. Appraisal districts are against the notion of appeals to BPP based upon unequal appraisal. (It is inappropriate to tax property owners that render the use of a fixed asset listing at the top level, and based on the Comptroller's Schedule, when it is permissible to tax property owners who do not render extremely low assessments.)
An appeal that is based on an uneven appraisals for BPP is straightforward and easy. Start by gathering information on the appraised value as well as the amount of manufacturing space and warehouses available to property owners who are comparable to the owner of the property in question. It is typically done by hiring companies that share the same Standard Industrial Code (SIC) as the property owner in question. This information can be obtained by sending an open records inquiry to the appraisal district. When appealing, you should research the assessed value for your opponents. In a brief, collect information about the subject's assessed value as well as the area of construction.
When is it appropriate to make appeals?
Appeal annually to appeal the market value of your BPP and an unequal appraisal. These two options can be appealed effectively. You must research the appraisal that is not equal using assessment comparables on the appraisal districts ' website. After you've assessed the value market-based of your BPP then you'll need to analyze it. After looking over both the unqual appraisal options and the market value you will be able to determine your primary focus to appeal the value of your BPP account. If neither market value nor unequal appraisal can be used as a basis for appealing your property taxes or property taxes, you are able to revoke your notice of protest or choose to skip the hearing.