Paying taxes is part of owning a commercial property. It slightly differs from paying residential property tax, as it’s higher and has different depreciating rules.
The amount you pay on taxes is based on your property value. However, due to appraisal mistakes and misclassification, you may pay higher taxes on your commercial property than you should. Here are two signs that may indicate so.
Insufficient information on the property’s value
It will help to hire an appraiser who is experienced in your property type to inform you of your property’s value. They will use three approaches to determine this – the cost approach, the income approach and the sales comparison approach.
The cost approach states the property’s value is equal to the land value plus total costs of construction minus depreciation. The income approach considers the income a property generates to determine its value, and the sales comparison approach uses data from recent sales of similar properties in the area.
Your appraiser may use other methods besides these. Regardless, you need to be informed of your property’s value to estimate the correct taxes associated with it. Even though the appraiser will handle the valuation, you should ask questions to get adequate information. If you are not well informed of your commercial property value and any changes to it, you may be overpaying taxes.
Your tax bill is extremely high
At times, you can easily tell you are overpaying when your tax bills are very high that you may end up paying out of pocket. However, to notice this, you need to follow up on your payments. Before sending a tax bill to the accounts payable, always go through it.
High commercial property taxes can significantly lower your profits, affecting your business growth. If you believe you are overpaying these taxes, consider your options to protect your rights.