Like real property – such as land, buildings, or other items attached to land – Business Personal Property (BPP) is taxable in the State of Texas, and is valued by your appraisal district. The deadline to render your BPP is April 15th.
So what is business personal property?
BPP includes, but is not limited to: equipment, furniture, fixtures, machinery, tools, copiers, cars, computers, raw materials, inventory, goods in process, and goods that are finished and/or waiting for sale or distribution. Basically, if it’s a tangible item and is used in your business, or used to produce income, it is included in the appraisal assessment.
What you should know:
- Rendition of BPP is due April 15th. Or, you can file for an automatic 30-day extension on that same date.
- A 10% penalty is applied if your Rendition is filed late or not at all.
- The effective date of valuation is January 1st.
- The property owner, or agent, can file a Rendition by providing the year they acquired the asset, as well as the cost, or by providing a “good faith estimate” of market value.
But be aware:
- The appraisal district where the property is located, will apply their published depreciation schedule to the original costs of the assets. This is how they determine the taxable value in most cases. However, this methodology may overstate the actual market value of the assets, as it typically does not apply an appropriate adjustment for physical, functional or economic obsolescence.
- If you file a Rendition based on a “good faith estimate” of market value, it allows the owner, or agent, to make appropriate adjustments for physical, functional, or economic obsolescence. It also allows for other adjustments that have a material effect on the item’s market value.
- Inventory is to be valued at its market value. This is defined as “the market value of an inventory is the price for which it would sell as a unit to purchaser who would continue the business.” In other words, most appraisal districts appraise your inventory at its original cost. Often, this does not take into account slow moving inventory, or the bulk sale concept, and therefore, may grossly overstate the actual market value.
This is a very busy time for business owners. With all the responsibilities, rules, forms, and deadlines, it can be overwhelming. If you need assistance with your Rendition of BPP – whether you’re looking to make sure you’re in compliance, or need assistance with value analysis, we’re here to help.