A Quick Guide to Business Property Tax

As a business owner, you are responsible for ensuring that your property taxes are up to date and paid in full. Depending on the type of business you operate, your tax liability may be different. However, all businesses are required to pay property taxes on any real or personal property they own.

What is Business Property Tax?

Business property taxes are taxes that are levied on the value of the business property. This includes things like buildings, machinery, and equipment. The tax is usually based on the assessed value of the property, and it can be used to fund things like public schools or infrastructure projects. Businesses typically must pay these taxes every year, and they can be a significant expense for some businesses.

Business property tax is generally calculated as a percentage of the value of the property being taxed. The rate can vary depending on the municipality in which the property is located, as well as the type of property being taxed. For example, commercial properties are typically taxed at a higher rate than residential properties.

There are a few different types of business property taxes, and they can vary depending on the jurisdiction.

Types of Business Property Taxes

Some common types of business property taxes include:

– Real estate property tax: This is a tax that is levied on the value of the real estate, such as buildings or land. The tax is usually based on the assessed value of the property.

– Personal property tax: This is a tax that is levied on the value of personal property, such as machinery or equipment. The tax is usually based on the assessed value of the property.

– Business inventory tax: This is a tax that is levied on the value of inventory, such as raw materials or finished goods. The tax is usually based on the assessed value of the inventory.

– Business license tax: This is a tax that is levied on businesses for the privilege of operating in a jurisdiction. The tax is usually based on the type of business, the number of employees, or the gross receipts of the business.

Business property taxes can be a significant expense for businesses, and they can vary significantly depending on the jurisdiction. Businesses should check with their local government to determine what types of business property taxes are applicable in their area.

How Often Must a Business Pay Property Taxes?

Property taxes are typically paid once per year, but the frequency can vary depending on the municipality. Typically, the tax bill will be issued in October or November and will be due by December 31st. However, some municipalities allow for quarterly or monthly payments. Check with your local county assessor’s office to find out the specifics for your area.

It’s important to note that property taxes are usually paid in arrears, meaning that they’re based on the value of the property as of the prior year. For example, your 2018 property taxes would be based on the value of your property as of December 31, 2017.

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How to Pay Business Property Taxes

Paying business property taxes can be a complicated process, but it is important to ensure that your business is up to date on its tax payments. Depending on the type of business property you have, there may be different tax rates and deadlines that you need to be aware of. Here are a few tips to help you pay your business property taxes:

  1. Know your tax rates: The first step is to find out what the tax rates are for the type of property you own. Business property taxes are typically based on the assessed value of the property, so it’s important to know what that value is to calculate your taxes correctly. You can find out your assessed value by contacting your local assessor’s office.
  2. Stay up to date on tax deadlines: Property taxes are typically due once a year, but the exact date can vary depending on your locality. Make sure you know when your property taxes are due so that you can make your payment on time.
  3. Pay your taxes in full: If you fail to pay your property taxes on time, you may be subject to interest and penalties. In some cases, the municipality may even place a lien on your property. This means that if you try to sell or refinance the property, the lien must be paid off first.
  4. Know how to appeal your assessment: If you feel like your property has been unfairly assessed, you have the right to appeal the decision. The appeals process can be complicated, so it’s important to research the process and make sure you have all the necessary documentation before filing an appeal.

Can Business Property Taxes Be Deducted?

Yes, business property taxes can be deducted. This deduction can be claimed for any tax paid on real or personal property used for business purposes. The deduction is taken as an expense on the business’s income statement.

To claim the deduction, the business must have paid the property tax during the year. The tax must also be assessed by a government entity and be based on the value of the property. The deduction cannot be claimed for any tax that is not assessed by a government entity or that is not based on the value of the property.

Some special rules apply to claiming this deduction. For example, if a business owns multiple properties, each property must be separately identified to claim the deduction. In addition, the deduction can only be claimed for the portion of the property tax that is attributable to the business use of the property.

The business property tax deduction can be a valuable deduction for businesses of all sizes. However, it is important to make sure that all requirements are met to claim the deduction. Businesses should consult with their accountant or tax advisor to ensure that they are eligible to claim the deduction and to determine how much they can deduct.

If you are shopping for business real estate, there are some factors you will want to keep in mind before purchasing real estate for your new business.

Business Property Tax Factors to Consider When Shopping for Real Estate

Business property taxes are one of the many factors to keep in mind when you’re shopping for business real estate. Here are four key considerations:

  1. Location: The location of your property will have a big impact on your tax bill. In general, properties located in high-tax states and municipalities will have higher taxes than those in low-tax areas.
  2. Assessment value: The assessed value of your property is another important factor to consider. This is the value that your local assessor places on your property for tax purposes.
  3. Tax rate: The tax rate is the amount of tax you’ll owe per $100 of assessed value. This rate varies depending on the jurisdiction in which your property is located.
  4. Tax exemptions: Some businesses may be eligible for tax exemptions, which can lower their overall tax bill. Exemptions are typically available for certain types of businesses, such as those that are “public utilities.”

Keep these factors in mind when you’re shopping for business real estate. By doing so, you’ll be better prepared to budget for your property taxes.

If you have any questions about business property tax, you should speak with an accountant or tax lawyer. They will be able to advise you on the best way to minimize your tax liability and ensure that you comply with all applicable laws.

Business Property Tax Bottom Line

Whether you are a current business owner or shopping for real estate to start a new business understanding business property tax is important.  The above article is to be used as guidance to better understand business property taxes.  If you are struggling with paying your business property taxes and want to prevent penalty fees or losing your property due to defaulting on the payment Progressive Business Capital may have a funding option to help you cover your property tax expenses.

Progressive Business Capital offers small business loans, merchant cash advances, invoice factoring, business lines of credit, and fixed-rate business loans. Please feel reach out to us to discuss how we can help you get funding.  We can be reached by telephone at (800) 508-4532 or via email at [email protected].

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