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How is Your Business Personal Property Valued?

One of the most frequent Houston property tax questions is, “How is my personal business property valued?” Property tax in Houston share the same regulations as most of the other cities and states in America. Texas property taxes vary depending on the type of personal property being valued. The two main types of personal business properties are industrial and commercial.

What’s the Deal with Commercial Property?

Commercial property is valued and appraised at 100% of the amount of the market value. The appraisal is based on how well the property can be utilized. It is easier to understand the value of a commercial business property because the same guidelines usually apply to commercial property as it would to personal residential property.

Role of County Appraisers

County Appraisers take into consideration incomes, costs, and sales when putting a price on commercial properties. Some local property appraisers provide a gross rent calculator that may be used to provide a formula that can assist in calculating the value of commercial property using the income approach.

The current state laws strictly enforce that appraisers must give an accurate appraisal of every personal business industrial property from top to bottom. The appraisal of all industrial properties must be fair to market value and all property usage must be taken into consideration when doing an appraisal.

The main difference between finding out the value of a personal business commercial property and a personal industrial property is that with an industrial property, machinery and other heavy equipment may affect the overall value. Most of the time, heavy equipment in an industrial property will be included into the value of the entire space. In certain rare cases, heavy equipment can be valued as personal assets. Regardless if heavy equipment is present in a personal industrial business property, the tax on the property will be the same.

Do I Need a County Assessor?

Whether the property being valued is a commercial property or an industrial property, the procedures to receiving a value are almost the same. A county assessor will be needed to help calculate and determine the value of the property. The county assessor will consider three major factors when doing an appraisal. The market value of the property is one of the most important factors to be considered. The property’s cost is also evaluated in addition to the market value by determining how much money it would take to rebuild the exact same property. The annual income earnings of the property is evaluated by the county assessor to determine the amount of an investors financial gains from the property. After all three of these factors are evaluated the county assessor will have a set value for the property.

According to realtor.org, individual properties proved to be 12% above or below the value that was appraised by professionals within two quarters after the appraisals were completed. This study shows a large difference in pricing appraisals in such a short amount of time. Studies such as these display the importance of having the right appraiser for the job to ensure that the property is accurately valued. Knowing how a property is valued is important and finding the right appraiser to value the property is equally as important.

Contact O’Connor today if you have any questions regarding the way your business personal property is being valued.

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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