How To Reduce Your Company’s Real Estate Taxes

Posted by Anne Sheehan on Jan 13, 2015

commercial-tax-reduceHere’s something peculiar about taxes and business in the United States: Corporate income tax is only 4.5 percent of a company’s annual tax liability, whereas more than 40 percent of corporate tax liability goes to pay commercial real estate taxes. 

Despite this disparity, many companies don’t have resources to allocate for property tax analysis and evaluation. Yet they do regularly spend small fortunes evaluating and managing their corporate income tax exposure.

Too often, companies view commercial real estate taxes as “just another cost of doing business.” Such taxes are indeed a cost of business, but they are not a fixed cost. Commercial real estate taxes are manageable and subject to a thorough analysis that confirms you’re paying only your fair share. 

If you’re paying too much — likely the case for many corporate occupiers in the U.S. — you’re in a position to unlock tax savings in the form of refunds and lower annual occupancy taxes.

Any business that values lean operating principles should see the benefit of lowering commercial real estate taxes. Corporations today are focused on the cost of running a business and working hard to create a more lean and profitable operation. While they typically track the cost of labor, utilities and equipment, few companies spend time tracking their largest cost of occupancy: property tax.

The complexity of corporate real estate taxes, coupled with the time and resources required to proactively manage them, prevents most companies from addressing them internally. Plus, executives are so busy with other priorities that property taxes usually aren’t on their radar.

Commercial property tax savings represent a significant opportunity for corporations focused on lowering costs. So, how do you reduce commercial property tax payments across your portfolio?

The best choice is to partner with a commercial property tax consulting firm that has expertise and institutional knowhow not available to you in-house. Understanding and managing commercial property taxes is a full-time job. To see real property tax savings, you need professional assistance.

Be sure to look for a firm that has representation in all 50 states; the broader your property tax advisor’s area of operations, the more they’ll know about how to save you money on commercial property taxes.

A careful evaluation of your commercial property portfolio could save you thousands of dollars — if not more. What could your company do with an extra $150,000? You could pay down debt, invest in a special project or prototype, or pay for capital repairs such as a new roof or parking lot. That money could also go toward performance bonuses or even expansion plans.

Those are just a few ideas; the possibilities are limitless. The takeaway here is that many business executives and decision-makers are facing constant pressure to reduce their corporate expenses. 

Transforming commercial property taxes from something you’re simply paying into a manageable expense, and then leveraging local, state and federal regulations in your favor to achieve real property tax savings is a real possibility for most businesses that own multiple properties.

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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