The vast variation in assessed value for BPP accounts (BPP) is what makes significant reductions in property taxes likely. It is not uncommon that property tax valuations for similar properties to vary by more than 5,000 percent. Sometimes, the cost of furniture and computers for businesses within the same office building may vary between $1 and $50 per square foot. Appealing BPP assessments is done through appealing either the valuation of the market or an unbalanced appraisal. Property owners may appeal BPP assessments with a high http://lorenzoowue816.lucialpiazzale.com/why-it-s-easier-to-succeed-with-first-time-home-buyers-than-you-might-think rate of success, provided they have been prepared. Market value as well as the appraisal's inequity should be contested.
Market Value, Book Value & Comptroller Schedule
Three commonly used options for describing value for BPP are market value, book value as well as the Comptroller's schedule. Section 1.04(7) of the Texas Property Tax Code defines market value. It reads like this:
Market value is the price at which a property will be sold in cash or its equivalent under the current market conditions. It refers to: (a) being openly available for sale on the open market within a reasonable timeframe for the seller to find buyers.
(b) Both buyer and seller are aware of possible uses for the property and the enforceable limitations.
(c)Both the seller and the buyer seek to maximize their profit and neither is in a position of taking advantage of the requirements of the other.
Let's take a look at the distinctions between market value book and Comptrollers schedule. The BPP for an average motel room will include items such as bedding, linensand bedding, windows with air-conditioning unit, towels, as well as a television. These kinds of items would likely be sold at 10%-30 percent less than their original price in accordance with their market value after one year. Based on the federal depreciation tables, the book value is a value that equals 80% of the purchase cost within one year. According to the Texas Comptroller's schedule, BPP for motels has an average life expectancy of 8 years with 10% depreciation over the first seven years. The Comptroller schedule says that hotel furnishings that are one year old are worth 90% of the original cost of purchase. This is not compatible with the market value.
Inventory
There are many debates concerning inventory assessment. This includes shrinkage or damage as well as functional and economic obsolescence. For instance, what is the market value of merchandise returned during the week after the Christmas holiday on January 1st (the effective date for valuation)? Since the item returned has generally been damaged, opened or missing parts, or could be considered to be unpopular and therefore is lower than what it cost in many instances. The market value of inventory is essential in determining its assessed value to Texas BPP tax.
Unequal appraisal
BPP accounts are usually assessed at between ten and fifty-fold the value of a company in the same business. Real estate brokerage offices with 10,000 square feet may be valued at anywhere from $10,000 to $500,000, depending on the size. It is highly unlikely that the computers and furniture in the office of a brokerage firm are 50 times more useful than that of another firm in terms of square feet.
Appraisal districts tend to take into consideration the value of assessed rendered by homeowners. Large companies often render using fixed asset listings. Appraisal districts use the cost basis information as well as the Comptrollers schedule to calculate the "market value" for property. The valuations associated with these rendered accounts typically significantly alter the value of the property. Owners of properties who do not render will have their values at the lower end of value. Although it could seem obvious that appraisal districts punish those who do not render their services by increasing their assessed value, the reality is quite the reverse. Appraisal districts reward homeowners who don't perform their services through allowing their assessed values to remain at a low amount. This deters homeowners from taking their time rendering. Additionally, it unfairly tax those who have a fixed asset inventory. These factors have led to huge dispersion of BPP assessed values.
How to Appeal an Unfair appraisal
Contrary the popular opinion, you can appeal BPP with an unequal appraisal. This is a fairly new idea. Tax consultants for property and big property owners have not employed unequal appraisal in relation to BPP. Appraisal districts have a strong restraining force against the idea of appealing BPP due to an inequitable appraisal. It is not the right way to tax property owners who use fixed listing of assets at the highest level. The Comptroller's schedule is a way to help homeowners who are not proficient in appraisal.
It is not difficult to prepare an appeal for BPP that is based on an unjust appraisal. Begin by gathering information about the assessed value and size of the office space/manufacturing area or warehouse space for property owners similar to the subject property owner. It is typically accomplished by using companies who have the same Standard Industrial Codes (SIC) as your subject property owner. This information can be obtained by submitting an open records request to the appraisal district. When appealing, you should research the assessed value for your competition. In a summary, compile information about the assessed value of the subject and the building area.
When should appeals be heard?
Appeal annually on market value and unequal appraisal. Appeal to these two options by analyzing unequal appraisals based on comparable appraisals on the appraisal district web site. Also, consider the market value of your BPP. After you've reviewed the market value options as well as the unequal appraisal, decide what your primary focus should be in appealing your BPP accounts. If neither market value nor an unequal appraisal provides a basis to appeal your property tax or property taxes, you are able to revoke the protest notice or choose to skip the hearing.