Recent court rulings open doors to lower property taxes on hospitality and industrial real estate. The focus is on intangible assets, often overlooked in assessments. Despite efforts to deduct associated expenses, the flaw persists. Removing only costs neglects the profit property owners gain from intangibles. Courts stress the necessity of returns on both investment and assets. This affects a range of businesses, from complex operations to smaller enterprises like restaurants. Assessments need adjustment to account only for taxable, tangible property values, excluding the enterprise value of intangible assets for fair property tax calculations
Two recent court decisions have opened opportunities to reduce property taxes on hospitality real estate and offer potential benefits to other commercial and industrial property owners looking to lower their assessments. The central issue in these rulings is the treatment of intangible assets for property tax purposes. While California and many other US states consider intangible assets non-taxable, efforts by county assessors to remove them from assessments often fall short, leaving the full value of intangibles unaddressed. The flaw in the system, recognized by appraisers, tax advisors, and attorneys, has seldom been discussed in court opinions until now. Assessors typically deduct expenses associated with non-taxable intangibles but fail to account for the return on investment, specifically the profit gained by property owners in obtaining these intangibles. The court emphasizes that property owners will only utilize non-taxable intangible assets if they receive both a 'return of' their investment and a 'return on' the investment, referring to the profit increment gained through employing the intangible.
- Two recent court decisions create opportunities to lower property taxes on hospitality real estate and benefit other commercial and industrial property owners.
- The focus of these rulings is the property tax treatment of intangible assets.
- California and most US states exempt or exclude intangible assets from taxation as they are considered non-taxable.
- County assessors attempt to remove intangible assets from assessments, but their efforts often fall short of eliminating the full value of these assets.
- The flaw in the system, recognized by appraisers, tax advisors, and attorneys, has rarely been discussed in court opinions until now.
- Assessors deduct expenses associated with non-taxable intangibles but fail to consider the return on investment or profit gained by property owners.
- Removing only the expenses eliminates part of the intangibles' value, namely the cost to the property owner or the investment amount.
- The court emphasizes that property owners will only use non-taxable intangible assets if they receive both a 'return of' and a 'return on' their investment.
- Commercial and industrial assets utilizing non-taxable intangible assets in operations may involve contractual arrangements, intellectual property, permits, customer lists, and other essential assets.
- The complexity of assets correlates with a higher likelihood of involving non-taxable intangibles.
- Smaller businesses within the property, such as restaurants or service providers, may also have intangible assets, and their enterprise value must be removed from assessments for property tax purposes.
Real Estate Articles / Feb 01, 2022
What if you were told that you could earn regular dividends from your investments without the hassles relating to buying, managing or even financing a property?
Real Estate Articles / Apr 04, 2023
Texas has become a place of choice for businesses because of its growing population. This growth has led to increased demand for commercial real estate development, specifically industrial development. This rise is set to continue until the end of 23
Real Estate Articles / Mar 09, 2019
Are you considering investing in commercial real estate? Not exactly sure which type of property to start with? Fret no more!
Real Estate Articles / Apr 26, 2023
The 2023 market condition,specifically commercial real estate development and construction industry is set for significant growth and innovation. Developers are saying that recession may be mild, and many growth and investment opportunities\'ll arise.
Real Estate Articles / Mar 16, 2019
There are several reasons why someone would choose to invest in commercial real estate.
Real Estate Articles / Feb 22, 2023
Grocery-anchored shopping centers are on the rise in the retail sector. They are the best investment in commercial real estate. It is low risk and long term.
Real Estate Articles / Mar 02, 2019
The US continues to be the world\'s leading recipient of cross-border capital, and it has no plans of slowing down. During the first half of 2017 the United States attracted 19.8 billion U.S dollars from foreign investors.
Real Estate Articles / Oct 27, 2023
Texas\' Landmark Property Tax Reform: Securing Affordable and Sustainable Homeownership for Texans, Envisioning Average Yearly Savings of $1,300.
Real Estate Articles / Feb 23, 2019
Are you leaving money on the table? When it comes to your investment property you need to be earning maximum returns. After all, you aren\'t in this to give away money, am I right?
Real Estate Articles / Apr 01, 2022
Capital gains tax is levied on the profits made when you sell property or sell investments owned by you. Here’s how you can be exempt from taxes along with the top tax tips for investors and property owners.