Generally, the assessment date for all property tax in Texas, regardless of property type, is January 1, each year. Learn how business personal property and real property tax values are determined below.
Business assets subject to business personal property assessment in Texas would include fixed assets, including machinery and equipment, office furniture and IT equipment, farm and vineyard supplies, molds, tools, and leased equipment.
Merchandise inventory, finished goods, raw materials, goods in process, supplies, and registered vehicles are also considered business personal property assets and are assessed. Assets generally not subject to business personal property tax in Texas would include leasehold or tenant improvements, computer software, permits or fees, intangible costs, financing fees, and items related to real property.
Texas requires filing an annual business personal property tax return that lists all assessable personal property owned by a business as of January 1. The return is due by April 15 each year to the local appraisal district. Currently, all business personal property, regardless of amount and cost, is required to be filed.
After the business personal property tax return is received by the appraisal district, the appraisal district will issue an assessed value notice, generally sent out to the property owner between May 15 and June 15. Upon receipt of the notice, a review of the proposed assessment is needed to verify accuracy of the assessment based on the business personal property tax return as filed.
The basis for valuation by the appraisal district is to value the assets filed on the annual return based on a county-specific depreciation factor schedule. Percent good factors are multiplied by the original cost amounts reported on the annual return.
As needed, an appeal of the business personal property assessment may be filed to challenge the proposed assessment. The appeal filing due date is 30 days from the issuance of the assessed value notice. If the proposed assessment shown on the assessed value notice is correct, no additional steps happen, and the assessment is considered final.
Real property valuation in Texas is accomplished by one of three methods of appraisal valuation: the market or sales comparison approach, the income approach, or the cost approach, as further detailed below.
As is done for business personal property tax assessments, the appraisal district will issue an assessed value notice for real property in the same manner, generally sent out to the property owner between April 1 and May 15.
Upon receipt of the notice, a review of the proposed assessment is needed to verify accuracy of the assessment based on the attributes of the property and the appraisal valuation method used. As needed, an appeal of the real property assessment may be filed to challenge the proposed assessment.
The appeal filing due date is 30 days from the issuance of the assessed value notice. If the proposed assessment shown on the assessed value notice is correct, no additional steps happen, and the assessment is considered final.
For both business personal property and real property, tax bills are generally issued around the October to November time frame and such bills must be paid by January 31 to be considered timely.
There are a variety of partial or total property tax exemptions and abatements in Texas. Many depend on specific criteria of the taxpayer, and many can be flexible to accommodate certain property owners.
In all cases below, exemptions and abatements require the filing of one-time or annual applications. Generally, the due date for all exemption and abatement applications is April 30. Local appraisal district chief appraisers are solely responsible for determining whether property qualifies for an exemption or abatement
When considering residential homes, there are exemptions for primary homesteads, people over age 65, disabled veterans and surviving spouses of disabled veterans, and surviving spouses of first responders killed in the line of duty, among others.
Texas property tax exemptions applicable to businesses include:
Additionally, there are special-use exemptions that will limit or reduce the valuation of property, such as agricultural exemptions for farmland, cattle grazing land, and temporary exemptions like property damaged during natural disasters.
Exemptions in Texas generally need to be applied for by April 30 of each year. Pollution Control exemptions require a certification by the Texas Commission on Environmental Quality prior to making the application for exemption.
Regarding property tax abatements or incentives, Texas taxpayers may enter into economic development agreements that can fully or partially exclude property from being assessed. If you’re in the site-selection process, or are planning on significant capital expenditures in Texas, get in touch with an advisor who specializes in abatements and incentives as early as possible in the planning phase to increase chances of obtaining such an agreement.
The strongest practices for Texas business personal property tax compliance, like all tax compliance, is to be accurate, timely, and to pay very close attention to the varying appeal deadlines to increase all tax savings opportunities. The life cycle of business personal property tax compliance in Texas can be summarized as follows:
For guidance on property tax in Texas, contact your Moss Adams professional.
