California’s business property tax has seen a rise in recent years. In 2017, California saw an increase of $1.5 billion in revenues from business property taxes. Despite the fact that property tax increases in California have been predictable over the past few decades, this may change with the split roll property-tax initiative.
Assessments of business property tax
California assessors usually use the cost approach for personal property valuation. This involves looking at historical sales prices and inflation factors. The tax bill will contain the assessor’s valuation information. If you are not satisfied, you can appeal the revaluation. It could lead to an increase in taxes. To avoid unfair or high tax bills, make sure you keep track of these. Once an appeal is received, the Board can schedule hearings to allow you to present evidence or data in support of your value argument.
Tips for managing your business property tax
Here are some tips to make managing business property taxes easy.
- Learn all about the local tax laws.
- Find out about possible deductions and exclusions.
- Take the time to review your bills and property forms.
- To help you, hire a tax advisor/accountant.
- Utilize basic accounting software.
If you are a new entrepreneur looking for a location to start your business, you should consider taxes before making a decision on a property. Taxes on business property vary depending on where you live. For more information about whether you are responsible to pay business personal property taxes, check with your locality.
California Split Roll Property Tax Initiative?
California taxpayers should be aware that a potential amendment to Proposition 13 could have a significant impact on the values and taxes on commercial and personal property as well as business property. Referred to as the “California split roll property tax initiative,” this amendment would divide properties into different categories – commercial/industrial properties vs. residential properties. All real property had previously been eligible for the tax cuts of Proposition 13 in 1978, which set a limit on property taxes and limited reassessment increases up to 2%. California business owners would likely see significant property tax increases if fair market value assessments were used.
Although California’s business personal property is already valued at fair-market value in California, the amendment calls for a tax exemption for the first $500,000 of business personal property. The amendment would provide relief to certain small businesses by exempting business personal property from tax for businesses with 50 employees or less.
Appeal for the tax assessment
You can appeal to the county Assessment Appeals Board if you believe the property’s value is excessive. These appeals are formal and must be filed in writing. You have a window of opportunity to appeal an assessment. It is usually between July 1 and November 30 in the current fiscal year. If your appeal is not completed by the due date for the first installment, you will still have to pay the taxes. If your appeal is granted, you will receive a refund for any difference in tax amount due to the liability reduction.
Bills for California business tax
Each county’s Tax Collector is responsible for collecting and issuing all property taxes. To calculate the tax amount due, multiply each jurisdiction’s tax rate with the assessed valuation. Then add them together to get the total tax. Secured taxes have a two-installment payment option. Unsecured taxes can only be paid in one installment. Collectors in almost all California counties may charge a 10% penalty if the payment is not received by due date. California may send additional bills in addition to the tax bills. Supplemental bills can be sent at different points in the year to address changes in ownership, new construction or completed property tax audits.