Video Gallery
Differentiating Between Real and Personal Property
PropTax Tutorials
Welcome to this edition of PropTax Tutorials.
The one challenge that every property tax professional encounters is trying to determine if an asset should be classified as real or personal property. It is important to properly classify the asset to avoid double taxation, where the asset is captured on both the real estate roll and the personal property assessment.
So, what is the difference between real and personal property?
Real property is described as the earth’s surface and all of the things permanently attached to it. Personal property is all of the remaining property not permanently attached to the realty.
Now, I know that might sound a little too general for differentiating between the two for specific assets but there are some basic checks one can use to determine if an asset should be considered real or personal property. The first thing to review is the local statutes and assessor’s practices. Different states and counties categorize assets differently. For example, certain size tanks may be considered real property while others are considered personal property.
If there is still doubt on the classification of the asset, property tax professionals use the three-pronged test. The first prong is the manner of annexation. How is the asset attached to the property? Is the asset attached in such a way that removing the asset would cause damage to the real property? Is the cost to remove the asset greater than the value of the asset itself? If the answer to these questions is yes, then the asset is generally considered part of the real property.
The second prong of the test is determining the primary purpose. Is the primary purpose of the asset to support the general use of the real property? Then it should be considered real property. However, if the primary purpose is to support a specific process, then the tendency is to classify the asset as personal property. For example, cooling components for building or people comfort are generally considered real property while cooling components used to cool the process equipment is considered personal property.
The final prong is determining the owner’s intent for the asset. Was the asset to become a permanent part of the real estate or did the owner intend to remove the asset at a future time? Would the asset be left with the building or taken if the business was to move?
The most important reason for taking the time to review your assets and differentiate between personal and real property is to ensure they are not mistakenly counted as both. Using these tips and practices should help you determine if an asset is real or personal property. However, if you still have questions or just can’t seem to make a solid case for a unique asset, contact us at 630.587.9700 or visit our website at www.advantax.com
Property Tax Consulting Services
About Advantax
Unsure whether your property has been fairly assessed? Call Advantax. We’ve provided property tax consulting services to businesses big and small for almost two decades. Our focus is on minimizing our clients’ potential exposure and ensuring they pay only their fair share of property taxes.
We specialize in reducing taxes for a variety of companies including multi-state manufacturers, retail operators, leasing companies and distribution networks. We’re proficient in complex valuation principles and the subtleties of local markets — if you have questions about exemptions, abatements, depreciation, trade levels and obsolescence, we have answers. We’ll take the time to understand your unique needs and challenges, and show you how to save money.
Some of the services offered by Advantax include:
• Personal property reverse audits
• Audit preparation and defense
• Personal property valuation and life studies
• Real estate valuation
• Appeals & negotiation
• Fixed asset studies
• Best practice analysis
To learn more about our personal property or real estate consulting services, please see the links below — or call a representative at 630.587.9700
One of Hardest Taxes to Manage
PropTax Minute
Welcome to Advantax.
I’m Regina Waldroup with your property tax report.
When it comes to property taxes – many companies are just not equipped to manage them effectively.
According to CFO Magazine – property tax is one of the biggest tax expenses – and the hardest to manage.
The sheer volume of jurisdictions – there are some 12 thousand townships – counties and states – can be overwhelming.
Companies may have property in hundreds or even thousands of jurisdictions – all with their own set up rules and filing requirements.
There are also misconceptions regarding property taxes.
Property taxes are often viewed as fixed costs.
Receive a bill – pay a bill – end of story. The reality is that property taxes are not fixed costs, they can be adjusted.
Another misconception is that fair market value is based on net book value or some other formula. Fair market value is not equal to net book value or some other formula. It’s based upon what a willing buyer and willing seller would do in an open market.
There’s also a fear of making waves in a community, not being a good corporate neighbor. Overpaying your property taxes doesn’t make you a good corporate neighbor. In fact nobody even knows your overpaying.
If you want to be a better corporate neighbor, pay only your fair share of property taxes and make a donation to the schools. Someone might notice that.
Managing property taxes is not a cake walk for jurisdictions either. They don’t have the manpower or expertise to evaluate each real estate or personal property parcel individually.
Out of necessity – they use mass appraisal techniques to value properties.
Take Los Angeles County for instance – it has more than 1.5 million personal property returns filed annually.
You can probably double or triple that figure for the number of real estate parcels that must be managed every year. How can jurisdictions possibly get them all correct?
The bottom line is that managing property taxes can be a pain.
What steps have you taken to overcome the misconceptions, improve the process and minimize the pain?
If your company needs assistance in managing property taxes – we’re here to help.
Visit our website – at advantax.com.
Thanks for watching.
Property Tax Assessment
About Advantax
Managing property taxes can be a year-long headache, what with all the different deadlines, valuations, jurisdictions, data and departments involved. At Advantax, we feel your pain — and we want to help. That’s why we’ve created the PropTax Assessment. This free tool will help you better manage the complexities of the process. By identifying areas of strength and weakness and comparing your company’s performance to others in your industry, you can improve your team’s performance and fatten your bottom line.
The PropTax Assessment identifies the five steps of the PropTax Cycle and then defines 10 key best practices within each of those five steps. By taking the simple, online PropTax Assessment, you will receive a customized report that analyzes your company’s performance in each step of the cycle against industry averages and provides recommendations for improvement.
The PropTax Assessment takes only 15 minutes to complete and no advance preparation is necessary. Just log on, answer the questions and fill in the key metrics. You can even arrange for multiple team members to take the assessment, which can highlight areas for your team to address.
To participate in the PropTax Assessment — visit our website — click on the link and follow the instructions.
Get in control.
Only Advantax offers a comprehensive look at best practices of the industry. Our PropTax Assessment shows you where you could be paying too much, where hidden liabilities may lie, and how you can take control of your property tax process.
To learn more about Advantax and the PropTax Assessment, visit us at advantax.com or call us at (630) 587-9700
Shopping for a Consultant
PropTax Minute
Welcome to Advantax. I’m Regina Waldroup with your property tax report.
Hiring a property tax consultant can be difficult.
Who should you use?
Which properties to appeal?
What fee structure?
While the focus is on how much can be saved on the tax bill – other deliverables are often overlooked.
To make your selection easier – start with the end in mind.
In addition to property tax savings – what other deliverables would be helpful?
Make a shopping list of the deliverables you want.
Don’t make the mistake of limiting your decision to finding someone who can just lower your property taxes.
Some of the things you may want to add to your shopping list of deliverables: detailed documentation – audit backup – project management reports– disposed asset listings savings reports – template for going forward – accrual estimates – the list goes on.
Many of these additional deliverables can make your job of managing property taxes easier and more fun – okay – well at least it will be easier.
Hiring a property tax consultant is an investment – one that can potentially save you both time and money. That’s a win-win situation for any business.
If your company needs assistance in managing property taxes – we’re here to help.
Visit our website – at advantax.com.
Thanks for watching.
Property Tax Wars in Iowa
PropTax Minute
Welcome to Advantax.
I’m Owen Jensen with your PropTax Minute.
Did you know that Iowa and Missouri had a war? Hard to believe but it’s true! And property taxes played a significant role in the dispute. The Honey War of 1839 began when both states thought a 9.5 mile strip running the entire length of the border belonged to them. Things got heated when a Missouri tax collector decided to cut down three trees containing honey in the disputed territory to collect the honey in lieu of taxes. Things got out of control when the sheriff from Clark County, MO was arrested by the sheriff of Van Buren County, IA for trying to collect taxes in the disputed territory. Tensions mounted and militias from both states gathered at the border. Cool heads prevailed and the dispute was ultimately settled by the U.S Supreme Court. All that conflict over property taxes!
It seems that Iowa has once again engaged in a dispute involving property taxes, only this time the conflict was within the state. The dispute was over a sweeping property tax reform bill that would cut commercial and industrial property tax collections almost in half over the next 5 years. According to a recent study by cost, “competitiveness of state and local business taxes on new investment”, Iowa has the highest effective property tax rates for commercial and industrial structures of all the states. Proponents of the bill said the high property taxes on businesses impede local development. Critics of the bill said it washes away the autonomy of local governments.
After much debate, on 5/10 the Iowa house passed the sweeping overhaul of the state’s property tax systems.
For more property tax news, check out the PropTax Minute at advantax.com
Thanks for watching.
About PropTax Assessment
About Advantax
Managing property taxes can be complex. There are many different deadlines, valuations and jurisdictions to consider and those are just some of the external factors. Trying to build relationships with internal departments that provide data on assets, new locations and plant closings is a whole other set of issues. To help better understand these challenges, Advantax has introduced the PropTax Assessment. This free tool will help identify areas of strength and weakness within your current property tax process and benchmark your company against others in the industry. Over 100 companies have participated in the PropTax Assessment and many tax departments have benefited from its findings.
The PropTax Assessment has its roots in the PropTax Cycle introduced to the industry in 2005. The PropTax Cycle outlines five major categories of best practices to help manage property taxes throughout the year. These steps include data preparation, compliance processing, assessment management, payment processing, and analysis and planning. The PropTax Assessment asks 10 key questions on each phase of the cycle and finishes with a handful of questions on key metrics to benchmark against companies in similar industries.
The output of the PropTax Assessment is a customized report that analyzes your company’s performance in each step of the cycle against industry averages. The report provides recommendations of focus within the five steps of the PropTax Cycle. The PropTax Assessment takes about 15 minutes to complete and no preparation is necessary. Simply answer the questions and fill in the key metrics. When multiple members of the same department take the assessment, the results can highlight areas of agreement and disconnect within the team. To participate in the PropTax Assessment, just click on the link and follow the instructions.
The PropTax Assessment, just another way that Advantax is demystifying property taxes and helping organizations across the country. If you would like to learn more about Advantax and the services that we offer, please contact us at www.advantax.com or (630) 587-9700.
Hiking Property Tax Trails
PropTax Minute
Welcome to Advantax – I’m Regina Waldroup with your property tax report. Personal property tax reporting can be like hiking mountain trails – tedious and rocky.
Did you know that thirty-nine states tax personal property and each one does it a little different?
Combined – they have around eight thousand different depreciation tables – along with specific guidelines for how to apply them. It can all be a bit confusing.
In Utah – for example – in order to use an accelerated depreciation table – and thereby save property tax dollars – for computer integrated machinery – that machinery has to meet a whole list of conditions.
In a nutshell – if the machinery is a whole on its own – it’s taxable. But – if the machinery is comprised of several pieces – it may not be taxable.
The bottom line is that interpreting property tax guidelines can be confusing. But there’s hope. With the right tools and processes in place – personal property tax reporting can be simplified.
If you’d like to learn more about our services – just call us at 630-587-9700 or visit our website – at advantax.com. Thanks for watching.
About A Tax To Grind
About Advantax
Welcome to Advantax. In 2009 – Advantax launched its property tax blog – A Tax to Grind – to enlighten and entertain those afflicted with property tax.
Advantax’s founder and CEO, David LeVan, correlates current events and news to bring a practical approach to property tax implications.
A Tax to Grind takes a fun and refreshing look at front-line stories, historic lessons and important information that affect property taxes.
Since its inception, the blog has created a significant following of readers nationwide.
A Tax to Grind is just another way Advantax is demystifying property taxes. If you’d like to see what the buzz is all about – visit taxtogrind.com or click on the a tax to grind icon on our website . Who knows – you may start to look at property tax differently!