Businesses need to keep as much cash in their coffers as possible. Commercial real estate can be costly, and while many companies choose to lease, others purchase commercial property. The downside of ownership is that the business is responsible for all repairs, and the owner will also be responsible for property taxes
And property tax can be very expensive.
Accountants work to lower the property tax burden of their clients, and there are a few key methods that are used to help businesses pay fewer property taxes.
1. Early Payment Discounts
Some tax bills will provide a discount for early payment. A business’s taxing jurisdiction may offer an incentive for paying tax bills early. The tax discount can be substantial, with some jurisdictions in the United States offering as much as a 4% discount when property taxes are paid early.
Staggering payment options may be offered, and these payments may be beneficial if a business cannot pay for their taxes upfront.
But when businesses can’t afford to pay upfront, these staggering payments will allow them to pay over time, often at a slightly higher rate, while still satisfying their taxes.
2. Appeal Property Tax Descriptions
Businesses have a right to appeal their property tax descriptions. “It is important for property owners to carefully review their property descriptions because some types of errors may lead to higher property taxes,” claims Property Tax Attorney Gary H. Smith.
Appeals can be leveraged in several ways:
- Appeals can lead to a lower property tax
- Appeals, in some states, reduce the tax burden while the appeal is ongoing
For example, in Georgia, it’s possible to appeal property tax, which will lower the tax burden to just 85%. If a business needs capital for an investment, they may submit an appeal and pay the remaining 15% of their taxes due after the appeal process has finished.
A lot of jurisdictions will follow something similar, so they will not require the full property tax amount to be paid immediately.
The appeal can also lead to a lower tax burden, which leaves more money in the business’ bank account.
3. Talk to the Local Assessor
The local assessor is a business owner’s friend. An assessor is able to tell businesses information about their property that they don’t even know. A few of the most important pieces of information that an assessor can provide includes:
- How other properties in the area are assessed
- The exact square footage of the property
A local assessor will help businesses better understand what they’re paying for in their taxes. The payments may be adjusted based on this information, but at the very least, the owner will understand how property taxes work in their area.
The assessor will also be able to discuss average rental rates in the area.
Businesses that own their own real estate will often use any excess space that they have as a rental. The benefit to this is being able to offset loan and property tax costs by collecting rent. It’s the process of utilizing empty space for the benefit of the business.