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Texas Business Property Tax: How To Forecast & Manage Your Local Assets

Posted by James Frazier on Mar 15, 2018 10:23:19 AM

Texas Business Property Tax: How To Forecast & Manage Your Local Assets

This year, there’s a new deadline looming for Texas business personal property tax filings: April 1. Are you well-versed on how to report your company’s assets accurately, and forecast a reliable estimate for next year’s tax liability as well? Take a look below at some tips on how property tax professionals in the Lone Star State can best manage their assets for commercial property tax in Texas, and how to prepare for the 2019 budget season.

Texas Business Personal Property Tax: Managing Your Assets


For the most part, Texas has uniform rules with regard to key deadlines and reporting procedures. But there may be some variances across Texas Central Appraisal Districts (the term this state uses to refer to local assessors), so we recommend double-checking the policies that pertain to your specific district.

In general, however, these are the key dates that Texas business personal property holders need to know:

Key Dates

Explanations

1/1 Lien date for all property

Businesses must report all assets on the books as of this date, in the current year.

4/1 Return deadline

Rendition (tax return) due date, by mail or electronically. (This date is new as of 2018; it used to be 4/15.)

5/1 Return extended deadline

Returns that have been granted an extension are due by this date. (This date is new as of 2018; it used to be 5/15.)

See how using TotalPropertyTax (TPT) software reduces the time you spend managing your assets and improves the efficiency of your tax team.


Almost all Texas Central Appraisal Districts accept the Texas Comptroller of Public Accounts rendition form 50-144. If returns are not filed by 4/1, or are filed late, the assessor will use an average assessed value based on comparable businesses, and may also add a 10% penalty on top of that assessment. (Note that the postmarked date is accepted.) Some larger counties allow filing electronically now in lieu of a form.

Three Things To Know About Texas Business Personal Property Tax

 

  • If your opinion of the total market value of your business assets is under $20,000, you are not required to report detailed asset information such as asset classifications, costs, and acquisition years; it’s acceptable to provide a lump sum value. Even though a detailed report is optional in this case, we recommend furnishing as many details as possible in your return to increase the likelihood that the appraiser will accept your value.

 

  • Although almost all counties in Texas allow the use of form 50-144 to report costs & values, keep in mind that all appraisal districts have their own valuation factors (depreciation tables). So it’s important to gather this information from any of the relevant 250+ Central Appraisal Districts to accurately report an opinion of value for your assets.

 

  • Some businesses filing commercial property tax in Texas may be eligible for a special tax exemption called the Freeport Exemption. Inventory that resides in the state for a short period of time (175 days or less) and will be transported outside of Texas may be tax-exempt. (The Freeport Exemption does not apply to oil and gas.) This could lead to a sizable reduction on your company’s inventory value and reduced taxes. If you believe some of your business assets may qualify, you must file a separate form sometime between January 1 and April 30 of the current year. Keep in mind that, even if you’re applying for this exemption, you still need to account for those assets on your actual return. If the exemption is granted, the assessor will reduce the total value by the amount of the exemption.

Forecasting Your Texas Business Property Tax

 

Now that you’ve filed your Texas returns for this year, you need to forecast next year’s tax liability. To build an estimate, you’ll need three pieces of information:

 

  • The value of your current assets, including the costs, classifications, and acquisition dates. To use this information for next year’s forecast, age them an additional year, and re-depreciate them to create an estimated value for next year.

 

  • Estimated additions, or assets the company plans on acquiring through the remainder of this year. To determine this amount, determine what portion of your company’s capital expenditure (CapEx) is allocated to purchasing new assets during the year. Then depreciate those costs against age 1 depreciation factors (because those assets will be a year older next year) to come up with a rough estimate for your additions.

 

  • Estimated disposals, or assets the company plans on getting rid of over the remainder of the year. Just like additions, you may not have the exact disposal information for your assets on hand mid-year, so devise an estimate based on historical percentages of disposed assets. You can apply it against the current year asset estimated value to reduce your total projected value.

 

Current assets + Estimated additions - Estimated disposals = Forecasted Texas business property tax

 

Need help managing your assets and forecasting your tax liability?

 

Visit our website to learn more about TotalPropertyTax (TPT) software. Built by tax professionals for tax professionals, it reduces the time you spend tracking assets, allowing you to quickly import, distribute, roll forward, classify, dispose, and transfer them. It also includes a unique integrated budgeting tool that captures historical tax information and assists with measuring changes in asset values to help you produce a more accurate forecast. Interested in learning more? Get in touch with us today to learn how TPT software can help your property tax team work smarter.

 

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Topics: Texas business property tax