Property Tax
Tax on real estate based on assessed property value.
Property tax is levied by local governments on real estate based on the assessed value of land and improvements. Rates vary widely by jurisdiction—from under 0.5% in some areas to over 2.5% in others. Business owners who own commercial property pay property taxes directly; those who lease typically pay a share through their lease as part of operating expenses.
Example
A business owner with a commercial building assessed at $400,000 in a county with a 1.5% property tax rate pays $6,000 annually in property taxes.
Why It Matters for Your Business
Property taxes are a significant ongoing cost of owning commercial real estate, and they can increase substantially if your property is reassessed at a higher value.
More Taxes Terms
Adjusted Gross Income
Gross income minus specific deductions like retirement contributions.
Tax Audit
An examination of tax returns by the IRS to verify accuracy.
Capital Gains
Profit from selling an asset for more than its purchase price.
Capital Loss
Loss from selling an asset for less than its purchase price.
Tax Deduction
An expense that reduces taxable income.
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