How Property Tax Assessments of Fixed Assets are Often Overvalued by 20%-40%
Many states provide their county assessors or appraisal districts with depreciation tables that do not accurately represent correct market values according to the law, property tax code, standardized methods of appraisal, and in most cases their own appraisal manuals. If the assessment values of fixed assets are not properly appealed or protested, then property owners are probably paying inflated property taxes annually.
In addition to the general corrections we discover for our clients such as removal of ghost assets, non-taxable or exempt assets, phantom inventory, and double assessments, we also challenge the valuation of tangible assets and inventory. This generally results in a 20%-40% business personal property tax reduction or tax refunds for many of our clients.
Most counties use depreciation tables based upon Marshall & Swift Cost manuals to value business personal property which only reflect physical depreciation and do not properly account for functional or economic obsolescence. In addition, their depreciation tables use straight-line depreciation which is not how assets depreciate.
- If a business owner purchased an office desk one year ago for $1,000.00, they might be lucky to sell it for $350.00 (its true value), but the county may be valuing this desk (and charging taxes) for $900.00. This desk is being overvalued almost 40%.
- If a business owner purchased a laptop computer one year ago for $1,000.00, they might be able to sell it for $440.00 (its true value), but the county may be valuing this computer (and charging taxes) for $680.00. This laptop is being overvalued almost 35%.
This scenario applies to all types of equipment including computers, racking, point of sale equipment, furniture & fixtures, machinery and equipment, and other types of personal property. The amount of overvaluation varies depending on the asset location, asset type, age, physical and market conditions. Over inflated valuations result in overpayments of property taxes. It is the tax-payers responsibility to challenge the values and provide evidence to justify any value corrections. It is highly likely that if a property owner has not challenged the assessor’s valuation of their fixed assets, they have been overpaying every year. In fact, Paradigm Tax Group has discovered some assets overvalued by 50%.
The process of appealing business personal property values can be complex and acquiring the right evidence to justify the reductions can be challenging and time consuming. Paradigm has a proven track record and refined business personal property appeal strategies with knowledgeable consultants that specialize in retail, industrial, manufacturing, office, data center, and hospitality industries.
Our property tax appeal services are typically findings fee based so there is no upfront cost or risk to engage us to pursue your property tax reductions. We also provide compliance services for business personal property tax returns and often embed our approach to savings in the renditions where accepted and permitted. We have regional and industry specialists located throughout the US in 23 offices to leverage local resources to secure the best possible results.
Let us show you how much you might be overpaying in property taxes every year! Contact our experts today for a complimentary consultation.