Petroleum and Chemical properties fall along the spectrum of the production cycle of petroleum and chemical products from research and development to processing and refining to storage and pipeline transportation. Property tax valuation is based on the assessment of the structure (or structures) on the property and the land.
Equipment that is fixed to the structure in a way that the cost of removal would be in excess of the cost of the equipment due to structural damage to the building is considered part of the real property for property tax appraisal purposes.
Equipment that is not fixed to the building is considered Business Personal Property (BPP). BPP is any property you own that is used for business purposes. It is not your real property. BPP generally includes computers, equipment, fixtures, furniture, inventory, machinery, supplies, vehicles and other items in your place of business or related to your business that are moveable without causing damage to itself or the associated real property.
For appraisal purposes, a county appraisal district (CAD) typically subdivides Petroleum and Chemical properties into the categories shown above based on their highest and best use. A CAD will derive two different values when appraising real estate property: Market Value and Equity Value.
The most common strategy used by the CAD to determine Market Value for Petroleum and Chemical real estate is the Cost Approach including any evidence of new construction or remodeling. Cost Approach can also be supported by the Sales Approach where market data and comparable sales in the area point to a lower value.
The Equity Value, also known as Uniform and Equal, is based on the CAD’s valuation of Comparable Properties and can also be used to fight for a lower value.
When appraising business personal property (BPP) as described above, the appraisal district uses one or a combination of one of the following methodologies: Year of Acquisition, Book Value to Market Value Conversion, Net Book Value and New Age Mix, plus the use of standardized depreciation tables to determine the property tax value of a BPP account.
Bettencourt Tax Advisors, LLC has an experienced industrial team which can provide property tax services on complex industrial properties. These types of properties may be valued on the real estate and business personal property. Exemptions may also be applicable.
Contact Bettencourt Tax Advisors, LLC for more information on how BTA can help you lower your property tax values.