As a commercial property owner, you’re likely well aware of the burden that property taxes can place on your bottom line. However, what you may not know is that there are several strategies you can employ to legally reduce property taxes and free up valuable resources for your business. In this article, we’ll explore five little-known tactics that can help you significantly lower your commercial property taxes.
Understand Your Property’s Valuation and How to Reduce Property Taxes
The first step in reducing your commercial property taxes is to thoroughly understand how your property’s value is assessed. Most local governments use a combination of factors, such as the size, age, and condition of the property, as well as recent sales of comparable properties, to determine the assessed value. By closely examining the assessment process, you can identify potential areas where the valuation may be inflated or inaccurate and challenge it accordingly and reduce property taxes.
Appeal the Assessment
If you believe that your property’s assessed value is too high, you have the right to appeal the assessment. This process typically involves submitting documentation and evidence to support your claim that the valuation is excessive. This could include recent appraisals, documentation of necessary repairs or renovations, or evidence of comparable properties with lower assessments. By successfully appealing the assessment, you can significantly reduce your property taxes.
Explore Tax Exemptions and Abatements
Many state and local governments offer various tax exemptions and abatements for commercial properties, depending on factors such as the property’s use, the owner’s industry, or the property’s location. For example, some jurisdictions may offer tax breaks for properties used for manufacturing, research and development, or other specific business activities. Additionally, some areas provide tax relief for properties located in designated “enterprise zones” or other economically distressed areas. By taking the time to research and apply for eligible exemptions and abatements, you can substantially lower your commercial property tax burden.
Utilize Cost Segregation Studies
A cost segregation study is a detailed analysis of a property’s components, which can help you identify assets that can be depreciated more quickly, leading to significant tax savings. By separating the property into its various components, such as equipment, fixtures, and even landscaping, you can accelerate the depreciation of these assets, which can result in lower property taxes and improved cash flow.
Explore Property Tax Consulting Services
If navigating the complexities of property tax reduction seems daunting, consider working with a professional property tax consulting firm. These experts have in-depth knowledge of local tax laws, assessment procedures, and appeal processes, and can often identify opportunities for savings that you may have overlooked. While there is a cost associated with these services, the potential savings can far outweigh the expense, making it a worthwhile investment for many commercial property owners.
By implementing these five little-known tactics, you can significantly reduce your commercial property taxes and free up valuable resources to reinvest in your business. Remember, reducing property taxes is an ongoing process, and it’s important to stay vigilant and proactive in order to ensure that you’re paying only what’s legally required.
