Owning commercial property comes with many responsibilities, but one of the most important is paying property taxes. These property taxes can be hefty—but they don’t always have to be. There are several ways that property owners can reduce their commercial property tax burden, while still meeting their obligations as responsible property owners.
Different municipalities have different rules and regulations when it comes to how much a business needs to pay in property taxes. Knowing these rules can help you make sure that you aren’t overpaying for your property tax obligations.
If you own a commercial property, you know that property taxes can take up a significant portion of your budget. Fortunately, there are some steps you can take to reduce your tax burden.
5 Ways to Reduce Your Commercial Property Taxes
Paying property taxes is an unfortunate reality and unavoidable expense for business owners. But, there are several strategies you can use to minimize the amount of property taxes you pay each year. Read on to learn how you can save money on property taxes while still fulfilling all of your obligations as a responsible property owner.
1. Appeal Your Tax Bill
One of the most obvious ways to reduce your commercial property taxes is by appealing your tax bill. The appeal process varies from state to state, so it’s important to research what options are available in your area.
The key is to provide evidence that your assessment is too high or that the market value of the property has decreased since the last assessment. This could involve providing recent appraisals or comparing your assessment with similar properties in your area. An experienced negotiator with legal experience can help make sure that your assessment reflects the true value of your property and reduce your tax bill accordingly.
2. Negotiate with Your Tax Assessor
Another way to reduce your commercial property taxes is by negotiating directly with your tax assessor. This involves presenting evidence as to why your assessment should be lowered and then working with the assessor on an acceptable compromise agreement.
You may also be able to negotiate a payment plan if you are unable to pay all of your taxes at once. Many counties offer payment plans for businesses struggling to pay their full annual property tax bill upfront due to financial hardship or other reasons outside of their control (such as natural disasters). These payment plans will spread out payments over multiple months so businesses can pay off their debt without having to worry about large lump sum payments.
3. Research Tax Breaks and Credits
Many states offer tax breaks and credits for different types of businesses or properties that meet certain criteria, such as historic preservation or energy efficiency improvements. Researching these programs can help you identify potential savings opportunities that apply directly to you and lower your overall liability. Some incentives may even include partial or full exemptions from paying certain types of property taxes.
- Apply For Abatements
Abatements are special programs offered by some states and cities that provide relief to businesses experiencing financial hardship. These can be due to high property taxes or other economic factors, like low occupancy rates or costly safety renovations. Businesses must apply for abatement programs through their local government offices. If approved, they could see significant reductions in their annual tax bills.
- Check For Exemptions
Certain types of businesses may qualify for exemptions from their local governments which could result in reduced tax rates or even no taxes at all on their commercial buildings. Once again, this varies greatly from location-to-location so make sure you’re familiar with any exemptions that may apply in yours before filing each year.
4. Invest in Property Improvements
Making improvements or upgrades to a commercial property is one way to potentially reduce its assessed value—and thus its taxable amount—over time without having to go through the appeals process each year. Investing in improvements such as roof repairs, insulation upgrades, and energy-efficient lighting can make a big difference over time when it comes time for reassessment and lower bills down the road!
5. Hire a Professional Tax Consultant
Finally, hiring a professional tax consultant can be beneficial when it comes time for assessment season because they will have intimate knowledge of local laws and regulations regarding property taxation, as well as experience in navigating complex appeals processes, if necessary. A professional tax consultant may also be able to identify additional savings opportunities that would not otherwise be apparent on their own due to their expertise in the field.
- Utilize Deductible Expenses
Many business owners overlook deductibles when filing their property taxes. However, they can be incredibly beneficial in reducing the number of taxes owed each year. Common deductible expenses include repair costs, insurance premiums, and utility bills associated with a commercial building or land owned by a business owner or organization. Taking advantage of these deductions can significantly reduce your overall tax bill come April 15th.
If navigating all the various laws, regulations, assessments, credits, and exemptions related to commercial property taxation is too daunting, consider hiring a professional who specializes in such matters. They will have an intimate knowledge of all applicable laws and regulations as well as experience challenging assessments and applying for any relevant credits or exemptions which could save money for their clients.
Reducing Your Commercial Property Taxes
Reducing commercial property taxes doesn’t have to be complicated. There are plenty of practical steps business owners can take right now that will result in real savings over time. From appealing one’s current assessment or negotiating directly with the assessor, researching available tax breaks & credits, investing in necessary upgrades & improvements, or even hiring a professional tax consultant – these five strategies offer tangible ways for reducing commercial property taxes.
Taking advantage of any (or all) of these methods could make all the difference between paying more than necessary each assessment. By taking the time now to understand what strategies work best for reducing commercial properties taxes down the line, business owners will be able save time and money filing annually.