Appraisal of Business Personal Property
- What Is The Appraisal of Business Personal Property?
For taxation purposes, your property is classified as either real property (land, buildings, and other items attached to land) or personal property (items that can be owned but are not attached to land). Tangible personal property that you use to produce income is subject to taxation in the state of Texas.
Tangible personal property includes such things as furniture, fixtures, inventories, equipment, motor vehicles, vessels, and aircraft. These items are typically referred to as business personal property.
SB 340, passed in the 2003 regular legislative session, took effect January 1, 2004. If you own a business, or have tangible personal property used for the production of income, you are required by this law to report personal property that is used in business to the appraisal district. There are substantial civil penalties for failure to report, and both civil and criminal penalties may be applicable to falsification and tax evasion.
The Harris County Appraisal District has prepared a Guide to Personal Property Rendition to assist you in understanding and complying with this new law. You can view and download the guide by clicking here Rendition Guide.Copies of the various types of rendition forms, along with other tax forms, can be viewed and downloaded at http://www.hcad.org/Forms/.
Texas law requires the appraisal district to determine the January 1 market value of business personal property, even if the business owner fails to render it.
- What Are Your Responsibilities?
As already noted, your first responsibility as a business owner is to file an annual personal property rendition with the appraisal district. As a courtesy, the appraisal district in January mails rendition forms to businesses known to have been in operation in the prior year. If your business does not receive a form, it is your responsibility to contact HCAD before April 14 and ask for blank forms. We will mail you a forms packet at no charge. Most businesses need two forms, a general form and a form for vehicles. Some businesses need additional forms.
The filing deadline for renditions is April 15.
The rendition asks for information about the business location and the identity of the owner. The form asks you to provide an itemized listing of your business personal property assets. If your business personal property is worth $20,000 or more, you must provide either a good faith opinion of the market value of the property or the original cost and date of acquisition of the property, along with more detailed information. Various sections of the rendition deal with inventory, consigned goods, raw materials, work in process, furniture and fixtures, machinery and equipment, computers, leasehold improvements, and supplies.
In preparing your rendition, remember that personal property is taxable only if you own or possess it on January 1. The information you provide on your rendition should reflect the ownership, location, and assets of your business as of January 1. Business assets that were temporarily outside Harris County on January 1 may still be taxable here, depending on their use.
Your rendition to the appraisal district is confidential by law. For additional information on the rendition process, read the pamphlet at Rendition Guide.
In the late spring, after renditions have been reviewed and field work completed, the appraisal district determines the situs (place where taxable) of business personal property and sets proposed values. Then, the district mails notices of appraised value to business owners. Even though the value notice is not a tax bill, it is important that you review it carefully.
- What If Your Appraisal Is Too High?
If you disagree with HCAD's determinations of the appraised value or taxability of your business personal property, you have the right to protest before the Harris County Appraisal Review Board (ARB). The ARB is an impartial body of 70 citizens who sit in panels to hear value-related protests.
To receive a hearing, you must file a written notice of protest with the ARB. The protest must include your name and address, a description and identification of the property, and an indication that you are dissatisfied with some action taken by the appraisal district. Protest forms are available at the HCAD office. Unless the appraisal district sends you a value notice that specifies a different protest deadline, the last date for you to mail your protest and have it postmarked by the post office is midnight May 31.
It is often possible for issues to be resolved without having to appear before the ARB. Many of your questions can be answered by phoning the Harris County Appraisal District's information center at (713) 957-7800, or by visiting HCAD's main office at 13013 Northwest Freeway in Houston. Walk-in assistance is also available.