Request a demo

Get the latest posts from CrowdReason delivered straight to your inbox.

Business Personal Property Taxes in Texas [For 2020]

Posted by James Frazier on Oct 7, 2019, 2:16:00 PM

 

Business Personal Property Taxes in Texas [For 2020]

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 2020 budget season.

Texas Business Property Tax


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.
*A business may apply for a September 1 appraisal for inventory.

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.


All Texas Central Appraisal Districts are required to accept the Texas Comptroller of Public Accounts rendition form 50-144. However, they may require their own forms for assets such as leased equipment, aircraft, pipestock, etc. (Be sure to check with the specific district.) 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.

5 Things To Know About Texas Business Personal Property Tax

 

  1. Texas has one of the highest property tax rates in the country, with most properties seeing substantial tax increases year over year. As it has every year since 2006, Texas’ population again increased more than any other state—by more than 375,000—from July 2017 to July 2018. Therefore, county governments are currently in need of tax revenue to support this rapid population growth and a growing economy. Upward-trending valuations are an issue for property owners, who aren’t experiencing bottom-line increases at the same rate as property tax increases.

  2. Intangible asset valuation is important for calculating accurate assessments for both real estate and personal property. Texas business property tax assessors frequently use the income approach to value property. Assessors sometimes claim that income generated from a property or business is the value of the tangible assets, ignoring the existence of intangible assets that generate part of the income. For example, personal property valuations of power or gas companies may simply look at the income stream to determine the fair market value of those businesses, despite the fact that a portion of that income is derived from intangible assets. Until you’re able to measure and remove the intangible portion of that value, your assessments may not be fair.

  3. 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.

  4. Although 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.

  5. Some Texas businesses filing commercial property tax may be eligible for special tax exemptions. A few are listed below. If any of these Texas business personal property tax exemptions apply to your business, they could lead to sizable reductions on your company’s value and reduced taxes. (Tweet this!) 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 these exemptions, you still need to account for those assets on your actual return. If an exemption is granted, the assessor will reduce the total value by the amount of the exemption.

    • 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.) Refer to Texas Tax Code Section 11.251 for more details.

    • Exemption for Offshore Drilling Equipment Not In Use—This exemption may be requested for offshore marine or mobile drilling units, or offshore spill response containment systems. Reference Texas Tax Code Section 11.271(b) and Section 11.271(c) to determine if your property could quality for exemption.

    • Pollution Control Property Tax Exemption—If your property has received a positive use determination from the Texas Commission on Environmental Quality (TCEQ), you may qualify for a Pollution Control exemption. The TCEQ issued determination is required to be submitted with your Application For Pollution Control Property Tax Exemption. (Texas Tax Code Section 11.31)

    • Solar or Wind-Powered Energy Devices—Your company may qualify for an exemption from the installation and construction of solar and wind-powered energy devices if the primary use of the solar or wind-powered energy devices is for the production and distribution of energy for on-site use. (For more information, refer to Tax Code Section 11.27.)

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.

Request: CrowdReason Demo

Topics: Texas business property tax