A Case For Scrutinizing Your Commercial Property Portfolio

Posted by Anne Sheehan on Feb 12, 2015

Scrutinizing Your Commercial Property PortfolioCorporations with commercial property all over the country — if not the world — own these assets to make money. Either the work that goes on inside these properties generates revenue, or leasing out the space to tenants is profitable enough to keep the property in a portfolio.

As long as the bottom line is black, there’s not much reason to scrutinize these assets. As such, CFOs and other executives typically don’t know what their individual properties are worth from a tax standpoint. 

With more pressing priorities always on the table, most CFOs are unaware of what their company pays annually in commercial property taxes. This information, while easy to find, frequently goes unnoticed and is passed off as just another part of the status quo.

But commercial property value forms the basis of commercial property tax. If you don’t know what your properties are worth, you can’t begin to uncover the tax savings that are almost certainly hidden within your portfolio.

Assuming property taxes are just another fixed cost of doing business is a mistake. Commercial property tax payments are negotiable like any operating expense. When you’re not paying attention to your commercial property taxes, you’re leaving money on the table.

For example, did you know that most states don’t require you to report your business computers as personal property? If you’re paying personal property tax on your computers, you’re giving money away! If you’re not aware of this, how can you address it?

Business equipment and machinery classified as personal property should be regularly reviewed with an eye to functional or economic obsolescence. You shouldn’t be paying the same tax on a piece of equipment now as you did when you bought it new a decade ago.

Any company with its eye on the bottom line will negotiate for the best price on everything from landscaping and janitorial work to cloud data servers. Don’t you want to get the best price on your commercial property taxes?

Odds are good that you don’t even know who your local tax assessor is, let alone have a relationship with them.

In all honesty, you don’t have time to forge relationships with the local tax assessors in every county where you own property. However, the more a local assessor understands your commercial property as compared to similar properties on the market, the more fairly they’ll be able to assess your property value.

In 2002 it was easy enough to walk into a local assessor’s office, ask for your commercial property tax value to be lowered and walk out with about a 15 percent value reduction. But commercial property values dropped around 40 percent when the market crashed in 2008. Since all commercial property is not created equal, if assessors are still applying blanket value reductions, it’s possible that they’re not giving your property the value reduction it truly deserves.

If knowing local tax assessors, the value of your properties and the amount of commercial property taxes you pay annually isn’t something you have time for, consider joining forces with a team of commercial property tax experts that have the time, expertise and connections in place to do the work on your behalf.

Download RPTA’s free whitepaper, “7 Signs You Might Be Overpaying Your Commercial Property Taxes" for more insights into the commercial property market and to learn how to uncover hidden property tax savings.

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