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Business Personal Property: What is Taxed?

For those who may be unsure of what can be claimed as business personal property in terms of Property Taxes in Harris County, it is any tangible personal property that is used for making money. This type of business personal property is meant to be taxable at the very same tax rate as any real property in Texas. Examples of this type of property include cars, trucks, heavy equipment, office furniture, office equipment and inventory.

Business Personal Property and the Law

According to Texas law, business owners must report business personal property to the appraisal district for proper assessment and taxation. There are not any criminal penalties for those who choose not to comply but there is a penalty to pay…10% of the taxes.

To demonstrate this, let’s say that you have a business personal property account that has been assessed by the Harris County Tax Assessor for $100,000. Now, your normal taxes for this would be $3,000 going by a 3% tax rate. If you fail to comply with reporting this and you are found out, there will be an additional 10% added to the taxes that are due. So, your entire taxes would now be $3,300.

Because the range of assessed value for this type of business personal property is huge, it makes getting large reductions in your property taxes highly likely. It isn’t unheard of for the range of the assessed value for these types of accounts for various similar properties to have a variation of up to 5,000%.

As an example, there are times when computers and furniture for two different companies within the same building can vary in the assessment from $50 to $1 per square foot. Market value and unequal appraisal are just two of the options that you have for appealing assessments for business personal property. Because of the inequity inherent in business personal property taxes as well as the subjectivity of valuing such property, the property owners have a good chance for success when they are properly prepared for a business personal property assessment appeal. They can appeal both the unequal appraisal and the market value.

How do you appeal?

In order to appeal your business personal property taxes, you can send a letter to the ARB (Appraisal Review Board) or use what is known as the Comptroller’s Form. Either of these things can be done before May 15 of the year in question. If you decide to write a letter to the appraisal review board then it should identify the property in question as well as delineate the reason for the appeal.

Helpful Hints

The appraisal district staff tends to be more motivated to get appeals resolved the later in the season it is. For that reason, it is often a good idea to wait and file your appeal or appeal on or shortly before the May 15th deadline.
There may be times when you don’t receive the notice of assessed value with regards to your business personal property account, Whether you receive a notice or not, it is still extremely important to send in a written notice of appeal or appeal to the Harris County Tax Office or the office for your appropriate district. If the assessed value of the business personal property does not change more than $1,000, the appraisal district is not required to send you a notice of assessed value. Aside from that, if the notice is lost in the mail and then you do not send in an appeal notice, the right to appeal will be lost for the current year.
When you do send in your notice of appeal, also send a House Bill 201 request. This refers to a section of the Texas Property Tax Code which allows for property owners to get a copy of any and all evidence that the appraisal district is planning to use at the hearing two weeks before the date of the hearing. This keeps the appraisal district from utilizing any data that wasn’t provided to the owner of the property two weeks before the hearing.
Statistically Speaking

There are many firms that can take this and run with it for you. You do not have to be burdened with the added stress of handling this yourself. One firm in particular, O’Connor and Associates won 69% of the appeals for business property taxes in 2009. Most of these firms will not ask for anything up front either so you really have nothing to lose…they only get paid if they win your appeal.

Contact O’Connor today for more information on business personal property!

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Blog Author

Patrick O’Connor, MAI, Owner and President
Patrick O’Connor has been active in reducing property taxes, providing expert witness testimony and appraising commercial real estate property since 1983. Pat is active in publishing analyses and data with respect to the real estate market, while being a highly regarded media spokesperson for the real estate community. He holds a MAI, the highest achievable designation from the Appraisal Institute, and is a licensed senior property tax consultant. Pat earned a Master of Business Administration from Harvard University. In 2001, he authored the first definitive consumer guide to Texas property taxes, Cut Your Texas Property Taxes.

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