Equipment Appraisal Blog | Understanding Machinery Appraisals

Whether your business is moving up a floor, downtown, or to a newly renovated home office, your tangible business assets should be accounted for during the process. Personal property appraisals can protect your owned equipment from any loss, damage, or liability resulting from the relocation effort. Learn what these appraisals are and why you should have an accredited equipment appraiser perform a tangible personal property valuation before this important step.

What is Tangible Personal Property?

Originally a tax term, "tangible personal property" refers to any piece of property that can be picked up and moved. “FF&E” is a common catchall term to describe many types of personal property. This acronym stands for furniture, fixtures & equipment and includes office furniture, (filing cabinets, chairs, desks, credenzas), office business equipment (printers, scanners, copiers, computers, servers and related IT assets), and other related assets. The fixtures component pertains to cabinetry, shelving, HVAC equipment, and similar items which, although installed on the premises, might be removable and worth relocating to a new facility. Appraising tangible personal property can also assist your business with insurance, property tax, and internal capitalization for accounting purposes.

While there are several reasons for hiring an equipment appraiser, relocation is an often-overlooked reason to have your tangible business property values updated.

Potential Claims & Uses

If you are working with a moving company, they probably offer liability coverage to protect themselves if they damage or lose your items during the move. One of the mistakes you can potentially make is trusting that this coverage will be sufficient to protect your property. This type of insurance typically covers claims by weight or assessed value, which is vague at best and not for your benefit as much as the movers. They will usually pay only a fraction of the real value of these assets if the liability is on their end. You need to consider your own interests in this scenario. There is also the potential for physical loss liability claims if someone is injured during the move and disruption costs to your business. For these reasons, we recommend obtaining an appraisal of your FF&E personal property so there is a clear understanding of value before your move.

These valuations can be completed by machinery & equipment and personal property appraisers. Personal property is considered a sub-class of machinery & equipment and, therefore, many equipment appraisers have experience with these types of assets.

Once you have the appraisal report, reach out to your business insurance provider and discuss covering your property for the purpose of the move. You can also consider using the report for longer-term insurance needs and other reasons such as property tax and accounting purposes.

Before they can cover a claim, insurance companies typically ask for an independent opinion of value for your FF&E. Take the extra step to protect your business assets with a tangible personal property FF&E appraisal. Even if nothing goes wrong in the move, you will have peace of mind knowing that vital business assets have been appraised at fair market value.

Most people have come to expect the arrival of their personal property tax bill every year. But every year, there's always a few who get an unpleasant surprise. Sticker shock is rough enough, but when it's on your property tax assessment, it can be even more alarming. Fortunately, you do have alternatives to paying a too-high assessment. Here's a quick overview of what you should expect when you go through a personal property tax appeal.

What Do You Need to Know for a Personal Property Tax Appeal?

1. Start the process. In most situations, directions for starting the appeal process is included with the tax bill. If it isn't, it can be as simple as calling the tax agency's number to learn how the process is handled. In either situation, start the process as quickly as possible to ensure you'll be able to clear the problem up sooner.
2. Find what documentation you already have available. If the property is new this year, it's fairly easy for it to be mistaken for another model, trim level or other easily verified error, which can lead to an incorrect assessment. In that situation, you may be able to prove the equipment's value from the invoice. However, if it's had any use at all, you may want to consider that the value may have already dropped, much like when a truck leaves the dealer's lot with the new owner.
3. Consider whether that documentation represents an accurate value. If it's new equipment that had any use at all, you may want to consider that the value may have already dropped, much like when a truck leaves the dealer's lot with the new owner. In addition, if the equipment has been used hard, it may have already depreciated in value enough that even a reasonable tax assessment may be much higher than the equipment's actual value.
4. Get a certified appraisal report. If you can't come up with any documentation of the value, or if you feel that the value may have changed since that documentation was produced, your next option is to get an appraisal performed. However, you'll want to make sure the individual performing the appraisal has experience working with that type of equipment - after all, the tax assessor who first determined the value used by the tax office deals with a wide range of property, but usually doesn't have the specialized knowledge to deal with the variances in particular equipment types.
5. Send or bring your documentation to the tax agency for the appeal. Once you have your documentation in hand, present it to the tax agency in the manner recommended in their appeal process. If you're providing an appraisal report, make sure that it's from a certified appraiser who knows what methodologies to apply in your case.

By taking the time to fight a bad personal property tax appeal, you're protecting your bottom line. If you do need to have an appraisal performed on your equipment, please remember to have it performed by a certified appraiser. The certification process provides the appraiser with the knowledge and expertise to use the right methodologies for your case, methodologies that have been proven in a wide range of situations, including personal property taxes. When you follow these simple steps, your bad appraisal can soon be a thing of the past.

Whether your business is moving up a floor or downtown, your business assets can easily become lost or damaged during a move. Tangible personal property appraisals can protect your possessions from moving-related loss or damage. Learn what these appraisals are and why you should have an equipment appraiser perform a tangible personal property appraisal before a business move. 

What is a Tangible Personal Property Appraisal?

Originally a tax term, "tangible personal property" refers to any piece of property that can be picked up and moved. Your reception area furniture, business printers, and specialized tools all count as tangible personal property. Appraising tangible personal property can set equipment values for insurance purposes, depreciation, and amortization.

While any piece of tangible personal property can be appraised, it may not make financial sense to have a machine appraisal done for every item your business owns. An equipment appraiser can focus on setting the value of costly pieces of equipment, machinery, and furniture over inexpensive items like office decor or hardware.

While there are many use cases for hiring an equipment appraiser, a move is an often overlooked reason to have tangible business property appraised. 

Why to Hire an Appraiser Before a Move 

If you are working with a moving company on your upcoming relocation, they probably offer liability coverage to protect them from damaging or losing your items during the move. One of the biggest mistakes you can make is trusting that this coverage will be sufficient to protect your property. This type of insurance typically covers your things by weight, assessed value, or so-called replacement value of your items. Weight coverage values could be as low as $0.30 to $0.60 per pound, Allstate reports. In a worst-case scenario, a mover could misplace an expensive yet lightweight piece of optometry equipment and only have to reimburse your business $1.

If the loss of equipment would cause a disruption to your business and paying out of pocket to replace it would cause financial hardship, then we strongly recommend that you have a machine appraisal of your tangible personal property before your move. 

The appraiser will value your equipment, so you know exactly how much your fair market value your machinery commands. The appraiser can tell you how much it might cost to replace the optometry tool with a tool of similar value. 

Once you have the appraisal report, you can reach out to your business insurance provider and discuss covering your business assets for the purpose of the move. If something is lost, your claim will be subject to the deductible on your policy but otherwise you will receive money from your insurer to cover the cost of repairing or replacing your equipment. 

Before they can cover a claim, insurance companies want an outside opinion regarding the value of your equipment. When you have already done a machinery valuation, you can send them a copy of your appraisal report that certifies your equipment has a particular value. Getting the tangible personal property appraisal ahead of time protects your assets in case something goes wrong and gives you peace of mind during a highly stressful business move. 

Take the extra step now to protect your business assets with a personal property appraisal. Even if nothing goes wrong in the move, you will be glad to know that vital business assets are protected to their full market value.