BPP Book By Patrick O’Connor
What you need to know about “Personal Property Valuation” By Patrick C. O’connor
Personal property tax appeals are almost all successful for owners who render. This is because the appraisal district uses an outrageous depreciation schedule that grossly over-value business personal property. Assessors do not consider intangible personal property, use an unreasonable depreciation schedule and assume no ghost assets or obsolete business personal property.
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What are they?
- Using Inaccurate Depreciation Tables: Appraisal districts use a physical-life depreciation schedule that grossly over-values personal property. For example, district tables would value a one-year-old chair at 86 to 90% of its original cost. Hence, a $300 chair would be valued at $252 to $270, when its true value is likely $20 to $50.
- Taxing on Intangible Personal Property: ONLY tangible personal property (items you can see, touch, feel, and move) is taxable in Texas. If you have a $2,000,000 phone system, the total cost includes Tangible (plastic, metal, and silicone) and Intangible (service agreements, software, and trade secrets) property. Districts encourage property owners to render the TOTAL cost, which is not correct.
- Encouraging Property Owners To Include Inappropriate Costs: Incorporating freight, setup costs, and specialized buildings to house equipment, while included in depreciation tables (appropriate for the IRS), is dead wrong for personal property taxation.