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Business personal property (BPP) can be challenging to value because of the limited quantity of data available and primary reliance upon the sales comparison approach. Relatively speaking, a voluminous quantity of data is available when valuing real estate as opposed to valuing business personal property. Many real estate appraisals consider three approaches to value: cost approach, sales comparison approach and the income approach. By contrast, most business personal property appraisals depend...
Leasing Office Space Part 4 of 23
Selecting a Location
Location
Office space location issues can include proximity to existing and potential employees, clients, vendors, and various third parties. For companies with less than 100 employees, the primary criteria for selecting a location is typically proximity to the chief executive officers residence. As a company grows, office relocations also consider where both existing and prospective employees live. If a company moves 20 or 30 miles from its current location within a...
Preparing for Binding Arbitration
For many homeowners, the property tax appeal process can seem too difficult and therefore only about 8% appeal even though 70% of those who do appeal are successful. Most homeowners also do not realize that their appeal can be resolved at the informal hearing.
Here are some tips on attending an informal hearing for property tax appeals:
Before you attend the hearing it is important to make sure you are prepared and can provide evidence to back up your request for a property tax reduction....
Appealing Your Property Taxes By Binding Arbitration
How to apply for binding arbitration
Thousands of house owners in Texas will go through a process of appealing property taxes this year because the appraisal district incorrectly assessed their home value. Sometimes, to obtain a pleasing reduction takes time, but it is important to take advantage of options until you are provided a fair reduction.
Effective September 1, 2005, Texas Legislature amended the Texas Property Tax Code to allow owners the opportunity to appeal the assessed value...
Texas Business Personal Property Rendition and Taxation
The Texas Property Tax Code for many years had required owners of business personal property (BPP) to annually render those assets used in a business. Rendering is summarizing to the central appraisal district the ownership and value of the assets. Historically, however, over half of all owners of business personal property have not rendered.
The Texas law was unusual in that while rendition was mandatory, there was no penalty for not rendering. Therefore, many property owners did not render...
Highest and Best Use Analysis
Highest and best use analysis can assist an owner in maximizing return. Highest and best use analysis can be performed for acreage, site development, and for improved properties. Research and planning can substantially increase investment returns.
If in a metropolitan area, highest and best use can be a combination of uses including single-family, multifamily, and commercial. Mixture of uses and timing of development are both critical factors. Commercial and multifamily land will yield a...
Lease Audits
Lease audits are an integral and essential component of due diligence when purchasing an investment property. Lease audits apply to apartments, office, retail, industrial, self storage and any other type of property where written leases exist. In lease audits most rent rolls are accurate and consistent with the actual leases. Lease audits can compare rent roll to leases to bank records. Most investment property sellers have not engaged in the nefarious activities such as leasing a volume of...
Casuality Loss Hurricane
Silver Lining from Hurricane Ike
Hurricane Ike inflicted a steep penalty on the Texas Gulf coast. However, there is an inconspicuous benefit casualty loss tax deductions. Taxpayers may be able to take a 2008 deduction if either personal or business property was damaged by Hurricane Ike.
Meaningful Deductions
Some taxpayers will be able to completely eliminate their 2008 federal income taxes by utilizing a casualty loss deduction. It is not necessary to sell the property to be eligible...
Leasing Office Space Part 15 of 23 Lease Negotiations
When do You Start Paying for Office Space?
Tenants are generally provided time to prepare the office space for occupancy prior to the date when they must begin paying rent. However, in hot markets and for some very desirable properties or spaces, landlords will be able to require that tenants pay for office space beginning at the time the lease is executed. In such cases, it is possible the tenant will pay for space for four to 12 months, or even longer, prior to commencing operations within...
Alternative Minimum Tax Consequences Are Not a Result of Cost Segregation
Alternative Minimum Tax consequences are not a result of cost segregation. Nor is cost segregation accelerated depreciation. Decisions regarding cost segregation and accelerated depreciation are independent by the four options as illustrated in the following matrix:
Accelerated depreciation increases the amount of depreciation taken in early years of ownership but triggers alternative minimum tax consequences. The alternative minimum tax consequences are severe enough that many investors...
Cost Segregation - Tax Deductions (Cost segregation increases tax deductions )
By understanding business tax deductions, business owners may enjoy personal benefits from business expenditures - a nice car to drive, a combination business trip/vacation, retirement savings plan - if they follow the myriad tax rules.
The tax code allows deductions from gross income, which reduce income taxes. Increasing tax deductions reduces taxable income and income taxes. Therefore, knowing how to maximize your deductible business expenses enables you to lower taxes.
According to...
Comparable Sales Confirmation
Comparable sales are the key ingredients in performing the sales comparison analysis. The sales comparison analysis is one of three primary approaches to valuing real estate. The two other primary approaches are the income approach and cost approach. The sales comparison approach is often considered the most reliable approach in valuing houses and owner-occupied commercial properties. It is also widely utilized as additional support for the income approach or the cost approach when valuing...
Assessment Evaluation of Restaurants
Many restaurant owners have been shocked to learn that they are unable to sell or lease their restaurant property for an amount equal to its tax assessment value. The market value of a recently built restaurant is usually less than its construction cost. When an owner attempts to set a sales price or lease rate, he is unable to recoup his costs. Excess property taxes result from improper use of the cost approach to market value.
The cost approach is an excellent valuation methodology for...
Leasing Office Space Part 7 of 23
Budgeting and Layout
Define Budget and ExpectationsM
Define the building quality, price per square foot and total monthly budget for office space. The office space broker will advise you if your expectations are on realistic. Visit with the tenant rep broker to make sure the amount of office space you are seeking is consistent with your current and projected number of employees. The density for most American offices is between three and six employees per 1000 ft.² of net rentable space. (The difference between...
Comparable Sales Units of Measure
Comparable sales are routinely utilized to develop an opinion of value using the sales comparison approach, one of the three primary approaches to valuing real estate. (The two other primary approaches are the cost approach and income approach.) In some cases, the gross sales price is utilized to develop an opinion of value for the subject property. However, the sales price is more often converted to a unit of measure such as price per square foot or per unit sales price. This article overviews...
Leasing Retail Space - Types of Retail Space
What Type of Retail Space?
A great retail space for your business needs to be the right type of space in the right location. The previous portions of this article addressed location. This section will address options for the type of retail space.
Impulse versus Destination
Some purchases are made on impulse and other purchases are made after careful planning. Retail for the carefully planned shopping will be termed destination retail. Starbucks is a great example of an impulse purchase....
Leasing Retail Space - Foreclosures and Lease Cancellations
In Event of Foreclosure Foreclosure of a mortgage typically extinguishes all claims to the property. In other words, if you've negotiated a lease and started a business, your right to use the retail space is terminated by foreclosure unless there is a separate agreement.
Will Lender Cancel?
In many cases, the lender has a defined period of time to reject leases or they are assumed to remain intact. Further, lenders often want to retain the leases and tenants to make the property more...
Cost Segregation - Tax Deductions
"Few of us ever test our powers of deduction, except when filling out an income tax form - Laurence J. Peter, U.S. Educator
By understanding business tax deductions, business owners may enjoy personal benefits from business expenditures entertaining clients or donating to charitable organizations, - if they follow the myriad tax rules.
Only half of business entertainment expenses can be deducted. Eligible business entertainment consists of taking a client to a ball game, a concert, or...
Disabled Veteran Tax Exemptions in Texas
In Texas a disabled veteran's tax exemption is not the same as a disabled person's tax exemption.
To receive a disabled veteran tax exemption, you must be either a veteran who was disabled while serving with the U.S. armed forces or the surviving spouse or child (under 18 years of age and unmarried) of either a disabled veteran or of a member of the armed forces who was killed while on active duty.
In order to qualify for a disabled person tax exemption, you cannot engage in gainful work...
Leasing Retail Space - Evaluating Retail Space
Due Diligence
The previous sections of leasing retail space addressed selecting the general location, selecting the type of retail space and the sighting how to find your retail space. The next several parts will address issues to consider when evaluating a specific retail space option.
Access
Issues for each option include traffic counts, traffic patterns, and ingress and egress. As you evaluate location specific issues, contrast the features of the space being evaluated with the most...
Appealing Property Taxes for Your Home
Property taxes are a substantial expense for Texas homeowners, averaging about $3,600 annually. To reduce this expense, property owners should annually review and consider appealing property taxes. While there is no guarantee that an appeal will be successful, a recent survey conducted by O'Connor & Associates indicates that 70% of property tax appeals are successful.
Since the mortgage company typically disperses payments, property taxes tend to be a stealth tax. Although the homeowner...
Leasing Office Space Part 3 of 23
Selecting a Broker Meet Tenant Rep Brokers
Set up meetings with two or three of the tenant rep brokers if you have not chosen one after the first round of phone calls. The objective is to visit more regarding their office assignments, obtain their thoughts on locating appropriate office space for your business, and determine whether you will feel comfortable working with them.
Obtain Actionable Advice
While you make the final decision when selecting office space, you will want to feel...
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