Business Equipment Valuation Recommendation Examples

The published assessment practices survey report may include recommendations for improvement to the Assessor's procedures and practices. Below are examples of recommendations for the Business Equipment Valuation survey topic.

Correctly classify machinery and equipment reported on the business property statement (BPS).

Classification is an important element of the local assessment function for several reasons. Principally, it is important because property tax law requires the assessment roll to show separate values for land, improvements (including fixtures), and personal property. It is also significant because of the assessment differences between real property and personal property. Special assessments are levied only on real property, which includes fixtures, and personal property is appraised annually at market value, while fixtures are subject to article XIII A of the California Constitution and considered a separate appraisal unit when measuring declines in value.

The Assessor should make a concerted effort to prorate machinery and equipment costs reported on Schedule A of the BPS between personal property and fixtures, particularly when enrolling taxable property related to industries that are likely to mix fixtures and personal property in reported cost data. The Assessor's current practice may lead to inaccurate allocations between fixtures and personal property in specific industry settings and cause incorrect assessments.

Issue supplemental assessments for structural improvements assessed on the unsecured roll.

Section 75.14 provides that all property subject to the assessment limitations of article XIII A of the California Constitution shall be subject to supplemental assessment. Section 75.11 provides that supplemental assessments shall be issued following a change in ownership or completed new construction. Structural improvements, which are real property, are subject to supplemental assessment, regardless of whether they are enrolled on the secured or unsecured roll.

The Assessor's practice of not issuing supplemental assessments for structural improvements assessed on the unsecured roll is contrary to statute and results in the unequal treatment of taxpayers.