Everyone knows that ad valorem personal property tax, property taxes based on the estimated value of what you own, is just a part of life. But what about when you receive a tax assessment that has your machinery valuation estimated much high than what it should actually be? How do you fight the assessment to have it reflect your equipment's actual value? Let's take a quick look:
What's an ad valorem personal property tax assessment?
As a major source of income for governments, ad valorem personal property taxes are based on the assessed value of your property. Ad valorem is a Latin phrase meaning "according to value". A tax assessment doesn't keep up with current equipment value, it only reflects the tax assessor's knowledge of the subject. It doesn't reflect current market trends, slumps in your industry or other factors that may affect the true value of your equipment. It's also not usually customized to your equipment's specific condition, an area where there can be a vast difference between the values.
How is a qualified machinery appraisal different?
Having a machinery and equipment appraisal performed is very different from when a property tax assessment is done on your equipment. A qualified machine appraiser can provide significant details into their appraisal process and justification of value. It looks at whether the equipment is currently in demand in the market. Equipment appraisers will look at the equipment's condition and include that as part of their estimated value. It helps protect the owner when there needs to be verification of the equipment's value, such as when you've had a loss and need to provide documentation to an insurance company or when you're selling your business and want to ensure you're getting what your equipment's worth. A qualified machine appraisal can help provide collateral when you need to get financing for your business. But best of all, if you've had a bad assessment performed that doesn't properly reflect the equipment's valuation, having an appraisal performed by a qualified equipment appraiser helps you fight the assessment.
How you can use a qualified appraisal to fight an ad valorem tax assessment.
Because a qualified appraisal shows the current value of your equipment, it provides legal documentation of the machinery's current value. When you appeal your property tax assessment, your appraisal shows the assessor's office not only the equipment valuation, it also shows how the appraisal was developed. But why is it important to make sure the appraiser you use is qualified to provide an equipment appraisal that will hold up legally? An appraisal by a non-qualified individual won't stand up to scrutiny. To get the most out of your machinery appraisal, make sure the equipment appraiser is certified by the American Society of Appraisers, specifically a Certified Machinery and Equipment Appraiser. This way, you know they're following the legal standard by providing an appraisal developed in accordance with the Uniform Standard of Professional Appraisal Practice.
Though it can be really difficult fighting the tax assessor's office over equipment values, in the long run it's well worth it. But beyond tax benefits, there are even more reasons why having a machine appraisal performed by a qualified equipment appraiser is a great idea. From providing an accurate picture of your business' finances to getting a better price when selling or merging your business, having qualified equipment appraisals helps keep your business running successfully. Contact a machine appraiser today to start the process.