As a business owner, you’re always on the lookout for investments in commercial property. Thus, it’s important to gain an accurate valuation for every potential purchase. This information is also useful should you decide to sell something in your portfolio.
Placing a value on commercial property can be complex and it can also significantly impact your tax bill. There is no single formula to value commercial property, but outlined below are some of the more popular methods and key factors.
Location plays a vital role in valuing any property, including those of a commercial nature. The facilities, road networks, public transport links and much more will come into play when assessing the value of a commercial site.
The cost approach
Residential real estate is often valued in terms of how much the construction of the building cost plus the cost of the land. This is known as the cost approach. It can be used in commercial valuations. However, there is one significant drawback, it does not include the potential for the commercial building to generate income.
A comparative approach
Another useful way to assess the value of a commercial property is to compare it to similar buildings that are on the market. Generally, this involves comparing factors such as the number of rooms, the total floor space, and other key characteristics. Gaining an accurate valuation this way can be tricky, but an experienced appraiser may be able to make the necessary adjustments to give a fair value.
These are just some of the more common ways that a commercial property can be valued. The valuation of your commercial assets can impact your total tax bill. If you feel that you have been taxed too much, then there may be a route of appeal. Seeking legal guidance on the matter will give you a better idea of your options.