How to Save on Commercial Property Taxes

Posted by Daniel Jones on Jan 9, 2019 8:48:00 AM

property tax commercial

Part of the American dream is to own a business of your own. The entrepreneurial spirit is deeply ingrained in the American mindset, and for good reason. People who start businesses create opportunities for wealth for both themselves and those they employ. While taxes are certainly not part of the American dream, they are a persistent reality. And commercial property taxes are an unavoidable aspect of the business landscape. While they are unavoidable, are the amounts you pay as a business owner necessarily set in stone? No, they are not. With the right know-how and perhaps with some professional assistance, you can significantly reduce the amount of money you pay on commercial property taxes in Clayton County.

Why Do Businesses Have to Pay Taxes?

It could be argued that businesses should be free from paying taxes, particularly because businesses already give back to the local economy in the form of jobs, not to mention sales revenue that is taxed in Clayton County and most areas around the United States. But the property that a business sits on is indeed subject to taxation. The reasoning behind this is that since a business benefits from the various public works projects and other expenditures put forth by the municipality in order to keep the area presentable and attractive, it should pay its fair share. Fair or not, the reality is these taxes cannot be avoided. However, a portion of them can be written off.

How to Write Off Commercial Property Taxes

When you file your taxes as a business, the IRS, in order to help the government encourage business owners to do more business, allows a good amount of tax write-offs. When you write something off your taxes, you take the amount that you spent and that you are allowed to write off, and you subtract it from your earnings. For instance, if you are writing off money spent on employee health insurance, and you’re allowed to write off 30% of it, you would multiply that amount by 0.3. If you spent $10,000 on employee health insurance, you could write off $10,000 x 0.3 = $3,000. If your business made $100,000 for that year, only $97,000 of that would be taxable as a result of the write off.

The good news is, in Clayton County, commercial property tax can be written off in the same way. There are some restrictions, however. When you get your commercial property tax bill, the different things your tax money is going to should be outlined. Some of these can be written off and some cannot. For instance, anything that benefits your business such as building a new road or sidewalk cannot be written off.

On the other hand, there are some things that can be written off such as the maintenance and repair of some of these same items. While it can be confusing, you can check your local tax code to be sure. Also, because each category should be labeled on your tax bill, you just have to double check which ones are deductible. Either way, you may want to consult with a commercial property tax professional in order to maximize your write-offs.

Ways to Reduce Your Taxes Owed

The town or city in Clayton County is going to do their own assessment of the value of your commercial property. Keep in mind that this is not necessarily the final, bottom line number. The assessor may mean well, but he can still miss things that can reduce the amount of commercial property tax you owe. For instance, if the building has a significant structural flaw that the assessor couldn’t have known about, that can reduce the value of the property and therefore reduce the amount of money you owe in commercial property tax. Or if there is a major repair needed to the electrical system, or perhaps the building is in the middle of a construction project on the inside, either of these could be a solid reason to reduce the value of the building and the amount of tax you owe on it.

Also, there can be things happening in the vicinity of your business that could arguably hurt the value of the property. Large scale construction projects or urban blight due to fire damage of neighboring buildings could possibly reduce the appeal of your property. If it is likely someone would not want to buy your property as a result of something that is nearby it, that could be factored in to the valuation. A professional commercial property tax consultant can help you ascertain exactly how to drop the value of the building so you don’t have to pay as much in taxes.

If you decide to sell the business, there does not have to be a connection between the valuation of the property for the sake of tax purposes and the sales price. The two procedures for determining each value are different and not connected in any way.

What Happens When a Business Is Sold?

In the event your business gets sold, the commercial property tax you pay will vary based on when the property changed hands. The tax amount for the year will be the same, regardless. That was calculated before the business was sold. However, the amount you pay will coincide with the portion of the year during which you held the property. If you have the property for only one quarter of the year, then you will be paying one quarter of the commercial property taxes owed for that tax year. The person you sold the business to will be responsible for the other three quarters. And if you purchase a property, it works vice versa.

The American dream is often somewhat halted by taxes. But this does not have to be the case. If you understand how commercial property tax can be reduced and deducted, you can minimize the impact it has on your profit margin. Hiring a tax consultancy to guide you through the process can help remove the mystery and clear the way for bigger net profits.

 

 

Topics: Clayton County Tax Assessor

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