Intro to 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, Stored chemicals or petroleum products and aircraft. These items are typically referred to as business personal property.
Sections 11.01 and 11.14 of the Tax Code require that property taxes be levied on all tangible personal property that is used for the production of income in Texas. Most tax officials refer to tangible personal property subject to property taxation as business personal property.
What is a Rendition?
Section 22 of the Tax Code requires every owner of business personal property used or located in Texas to report that property annually. The report is called a rendition. The rendition must be filed with the chief appraiser of the appraisal district in which the property is located. The rendition requirement also applies to property your business manages or controls as a fiduciary.
The rendition requirement applies to all types of businesses, including sole proprietorships, partnerships, and corporations. The law requires the appraisal district to determine the market value of business personal property, even if the business owner fails to render it. A rendition helps ensure an accurate appraisal. Failure to render could cause additional assessments for property that may have been omitted from the appraisal roll. For this reason, it is extremely important that a rendition be filed annually.
Business Owner Responsibilities
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 MCAD before March 31st and ask for blank forms.
MCAD 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 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 Montgomery 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.
Vehicle, Boat, and Manufactured Home Dealers Inventories
Changes to the Texas Property Tax Code affecting the taxation of certain types of vehicles, vessels and outboard motors, manufactured housing and heavy equipment inventories held for sale or for resale are now in effect. This outlines certain responsibilities you will have if the law applies to you.
In summary, the law applies (with certain exceptions) to: (1) inventories of automobiles, trucks, motorcycles, recreational vehicles, or travel trailers held by a person who holds a General Distinguishing Number issued by the Texas Department of Transportation; and (2) inventories of certain vessels, boat trailers and outboard motors held by a person who holds a Dealer’s and Manufacturer Number issued by the Texas Parks and Wildlife Department; (3) Inventories held by dealers of manufactured homes; (4) Inventories held by dealers of heavy equipment.
The law provides generally that the market value of such an inventory on January 1 is the average of monthly sales for the preceding year. You are required to file an annual declaration of your prior year sales with the appraisal district before February 1. Additionally, by the 10th day of each month during the year, you must file monthly statements with the appraisal district and submit the statement and monthly tax prepayments to the county assessor and collector of taxes. Substantial civil and criminal penalties are provided in the law for failure to file the required declarations and statements timely.
Both the annual declarations and monthly reports must be filed on forms prescribed by the State Comptroller of Public Accounts.. Copies are available at no charge from the Montgomery Central Appraisal District’s Personal Property Department.
For additional information, please contact MCAD’s Personal Property Department at (936)-756-3354 or the Montgomery County Tax Assessor and Collector’s Office at (936)-539-7897.
If you own a business, you are required by law to report personal property that is used in that business to your county appraisal district. There are substantial penalties for failure to report or for falsification and tax evasion. The Montgomery Central Appraisal District has prepared this document to assist you in complying with this very important law.
What is a rendition?
A rendition is a form that provides information about property that you own. The appraisal district uses the information you provide to appraise your property for taxation.
Who has to render?
There are three categories of taxpayers who must render:
- Owners of tangible personal property that is used for the production of income (see below)
- Owners of property on which an exemption has been cancelled or denied
- Owners who have been formally notified by the chief appraiser that they must render.
What kinds of property must be rendered?
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).
Personal property used for business purposes or to produce income must be reported. This includes furniture and fixtures, equipment, machinery, computers, inventory held for sale or rental, raw materials, finished goods, and work in process. You are not required to render intangible personal property items that can be owned but do not have a physical form – such as cash, accounts receivable, goodwill, custom computer software, and other similar items. If your organization qualifies for an exemption that applies to personal property – for example, a religious or charitable organization exemption, you are not required to render the exempt property.
You may qualify for an exemption from ad valorem taxation for one passenger car or light truck that is owned by an individual and used by that individual for both professional and personal activities. Vehicles that are individually owned and used for the transportation of passengers for hire would NOT be eligible for this exemption.
To request this exemption, your application must be filed with the appraisal district on, or before, April 30. If you mail the form, it must be postmarked no later than midnight April 30. The individual who has been granted or has applied for this exemption is not required to render the vehicle for the year in which the exemption has been applied for or granted. The application form is available at www.mcad-tx.org/Forms/Business Personal Property/
What will the appraisal district do with my rendition?
Your rendition will be analyzed and used; along with other information we collect on similar businesses, to develop an estimate of value for your property.
Is my information confidential?
Yes. Information contained in a rendition cannot be disclosed to third parties except in very limited circumstances. In addition, the code specifically provides that any estimate of value you provide is not admissible in proceedings other than a protest to the ARB or court proceedings related to penalties for failure to render. The final value we place on your property is public information, but your rendition is not.