Personal Property Explanation
Personal property includes machinery, equipment, furniture and supplies of businesses and farmers and improvements to land that are leased from government. Household goods, certain intangibles, and business inventories are specifically exempt from personal property tax.
Property owners are required to file an annual listing of all taxable personal property that was located in the county as of 12:00 noon on January 1 of the current year by April 30. Personal property affidavits are available from the Assessor's Office. Owners of personal property must list each item, its acquisition cost and the year acquired for all taxable personal property.
The affidavit must:
- Include date of acquisition of each item.
- Total purchase cost of each item, excluding sales tax. The total purchase cost of an item includes all costs associated with making the property operational. For example, installation, freight and engineering charges are costs that may be incurred while placing property into operation. The value of any trade-in is to be included as part of the total purchase cost.
- Supplies on hand as of January 1 including office and retail (cash register tapes, Bags, etc.) supplies.
Once property is assessed and listed on the tax rolls, the assessor mails the property owner a new affidavit at the beginning of each calendar year. The property owner must verify the list, add or delete property as appropriate and sign and return the affidavit to the County Assessor by April 30.
A penalty will be imposed if the personal property affidavit is filed late. The penalty is five percent of the tax due per month, up to a maximum penalty of 25 percent. In the event that an owner does not file or report personal property, the Assessor is required to estimate the value of personal property based on the best information available to them.
Property owners should immediately contact the Assessor's Office if they believe an assessment is incorrect. The Assessor or one of his employees can explain how the value was determined and, if appropriate, make any necessary corrections. If the property owner still believes the assessment is incorrect or excessive, the assessment may be appealed to the County Board of Equalization on forms available from the Clerk of the Board. The Board must receive the appeal by July 1 or within 30 days of when the assessment was mailed, whichever is later.
Unless specifically exempt, all tangible personal property is subject to the personal property tax. The following list represents an example of the major classifications of taxable personal property.
MACHINERY AND EQUIPMENT, FIXTURES AND FURNITURE. In general, machinery, equipment, fixtures and furniture are considered personal property unless permanently affixed to real property. An item is considered permanently affixed if it cannot be removed without endangering the integrity of the real property to which it is attached. In addition, an item is considered permanently affixed if the item is situated in one location and adapted to use only in that location.
Examples of taxable personal property include:
- Office furnishings and equipment.
- Store fixtures and equipment.
- Computer software (canned or embedded).
- Manufacturing equipment (when not valued as real property).
- Construction equipment.
- Communication equipment.
LEASED EQUIPMENT. Leased equipment, including equipment leased under a lease-purchase contract, is subject to the personal property tax and must be listed with the Assessor. Either the lessor or the lessee is responsible for listing the equipment, based upon the terms of the lease.
FARM EQUIPMENT: All farm equipment, machinery, supplies, and small tools are subject to the personal property tax. Exemptions or partial exemptions apply to some farm machinery and equipment. Contact the County Assessor for additional information about exemptions.
LEASEHOLD IMPROVEMENTS. Leasehold improvements are subject to the personal property tax when a lessee/tenant of a structure retains ownership of the leasehold improvements or is required to remove them at the end of the lease. For example, the improvements a lessee makes to space leased as a shell are taxable as leasehold improvements. Leasehold improvements are subject to personal property tax regardless of whether real property is leased from a private party or a government entity.
SUPPLIES. Items held for resale (inventory) or which become ingredients or components of an article manufactured for sale are exempt from the personal property tax. However, supplies used in the daily operation of a business are subject to the personal property tax.
Video explanation of Personal Property Click Here.
EXEMPTIONS FROM PERSONAL PROPERTY TAX. The following are exempt from the personal property tax:
- Household goods and personal affects. (Unless they are used in a bed and breakfast, motel, hotel or other nightly rental situation).
- Personal property owned by governmental entities.
- Business inventories including livestock, items held for resale in the normal course of business, and materials that become an ingredient or component of articles being manufactured for sale.
- Custom software.
- Sole proprietors who qualify as a head of family are eligible for a property tax exemption on $15,000 of assessed value. The personal property affidavit has a box to check for this exemption. The Assessor determines who qualifies as a head of family. For those who qualify, the Assessor deducts the exempt amount from the assessed value of the personal property.
- Personal property accounts valued less than $500 are exempt from taxation. This exemption does not apply when the $15,000 head of family exemption has been claimed.
An annual application must be made to the Department of Revenue to exempt property owned by churches, schools, social service agencies, and other nonprofit organizations.