Business Personal Property Tax hearing

Thought I would share my observations and experience from yesterday.

Filed my Business Personal Property Rendition prior to April 15th this year. Got a letter back from HCAD and they valued my property at $35,852.

How, when the new location was being built someone drove by and they estimated the value for the new location. They never came inside to visit, just estimated it.

It is a new retail lease space, so I do not have to pay taxes on the building.

So, I filed a protest with a complete inventory of the items I owned as of January 1st, 2008. The inventory had to show the date purchased, purchase price and my assessment of cash value as of Jan 1st.

Then wait for a hearing date. My original date was the Monday after Ike and obviously that did not happen. Rescheduled date of October 9 at 10:50am. Had to lock up the studio and head to 290 and Hollister from Friendswood for my appt.

Walked in to a huge room full of people sitting and waiting. Checked in and prepared for a long wait.

Much to my surprise, my wait was about 10 minutes. Business hearings must be faster.

Sat down with a very nice lady and proceeded to show her my inventory. She divided it out into categories and entered all the data into her computer. I read a book. When done, she told me what her computer calculated the cash value to be based on her depreciation tables.

I had estimated my value at under $2500. She came back with over $4500. I grabbed my Ebay, etc printouts and started to challenge the depreciation rates for the equipment. The cameras, etc were not worth near what the computer calculated they should be and I had proof.

So she changed a few more things and we settled at a value of around $3500.00.

Now I wait for the bill in January for my taxes.

The entire process was a bit of a pain. The time it took to research and print out all my backup information, inventory and calculate the values, leave the studio for a day and go to the hearing. . . what a pain.

But, it is a requirement of the law for everyone in business. One that gets overlooked. However, after hearing conversations at other tables. I am SOOOOO glad that I am abiding by the law and came prepared. Believe me, you do not want to be found in violation.

[KdLaneJr]

Thanks for posting this. Although I'm not in the Houston area and won't file my first Business Personal Property Rendition until 2009, your settled value actually amazes me. I'm not sure that I can get anywhere near that low for my equipment(even basing values off of ebay, etc) and I don't have a B&M studio, leased or otherwise.

Very interesting...

[wondershots]

Business Personal Property Tax? Huh?

Originally Posted by KdLaneJr

Thanks for posting this. Although I'm not in the Houston area and won't file my first Business Personal Property Rendition until 2009, your settled value actually amazes me. I'm not sure that I can get anywhere near that low for my equipment(even basing values off of ebay, etc) and I don't have a B&M studio, leased or otherwise.

Very interesting...

Remember it is resale value. If you had to sell it right now, what would it be worth? Backdrops, etc are worth very little. Lucky for me my new camera equipment was purchased after January 1st.

Originally Posted by wondershots

Business Personal Property Tax? Huh?

Taxes have to be paid on all equipment, fixtures, furniture, etc that are used in the course of business. So all camera equipment, computers, desks, chairs, backdrops, lights, props, etc. etc.

[ara.bentley]

Originally Posted by KdLaneJr

I'm not sure that I can get anywhere near that low for my equipment

no kidding - the car I drive to get to places alone will be more than that

Is your car owned by the business? If not, that is not part of your business property.

[ara.bentley]

hmmm.. it's owned by me and I own the business... I will drive it to meet clients but also to do grocery shopping etc..

My business is just starting this month (I am finally taking payments for my work) so I will not have to do this until this upcoming January. It would be great if my car didn't have to be on there...

[SHIFTcanadian]

So pretty much, since I dont use anything studio (yet) all I need to declare is my camera equipment?

The tax on $7,000 ish worth of equipment shouldnt be too terribly bad.

[pbyd]

Originally Posted by ara.bentley

hmmm.. it's owned by me and I own the business... I will drive it to meet clients but also to do grocery shopping etc..

My business is just starting this month (I am finally taking payments for my work) so I will not have to do this until this upcoming January. It would be great if my car didn't have to be on there...

If your car is owned by you and not the business you deduct the mileage on you IRS taxes but it is not claimed as business personal property.

[ara.bentley]

Originally Posted by pbyd

If your car is owned by you and not the business you deduct the mileage on you IRS taxes but it is not claimed as business personal property.

Yay - you guys just made my day :) Luckily I have a couple more months to read up on this tax before filling out any forms but that's a great thing to hear!!

Originally Posted by SHIFTcanadian

So pretty much, since I dont use anything studio (yet) all I need to declare is my camera equipment?

The tax on $7,000 ish worth of equipment shouldnt be too terribly bad.

Remember don't be proud on the value of your equipment. It is not replacement costs it is what you could get for it if you sold right now. The lower you can get that value, the better.

[SHIFTcanadian]

so let me get this straight.

For BPPT: be frugal about replacement cost

For Insurance: make sure its up there in cost so as to get as close to replacement cost as possible.

Makes sense.

What is the BPPT tax rate? 3%?

[ara.bentley]

i think it's more like 10% :(

[Jeff Lane]

Ara, your situation is a pretty good object lesson. You might have made a big-dollar mistake listing your Bentley (or is it a Rolls?) as your business property, if you hadn't stumbled onto this little discussion. Rather than just relying on shear dumb luck and overhearing another discussion, it can often be worth the price of a quick consultation with a CPA around tax time to just make sure: (a) you're in real compliance with all the tax laws; and (b) you're not in "over-compliance" and paying way too much for the privilege of living in this great country.

Same thing is true for having a lawyer do a quickie review of all your important contracts. An ounce of contract-drafting prevention is worth $48,975.23 of lawsuit cure.

Just a thought