Assessed value is how much your business property is worth according to your municipal tax authority. That person (or entity) uses this figure to determine how much you’ll pay each year in business property taxes.
Assessed value is determined in two ways:
Either way, the tax authority then multiplies the value of your business property by your tax rate (also called a millage rate) to determine your business property tax bill.
For example, let’s say your commercial building where you run a business has a fair market value of $800,000. If your town only taxes 75% of a business property’s fair market value, then your building’s assessed value is $600,000. If your tax rate is $15 per $1,000 of assessed value, you’d owe $9,000 in municipal property taxes ($600,000 x 1.5%).
Assessed value is important because it determines how much municipal tax you’ll pay for your business property each year.
When business owners buy commercial property insurance to protect their business property, they must decide whether to insure their property’s replacement value, meaning what you’d pay to replace it with a similar property, or its actual cash value, meaning the property’s replacement value minus how much the property has depreciated over time.
You rely on your commercial property — equipment, inventory, buildings and more — to run a successful small business. If something bad happens to any of these assets, you could be in a tough spot. NEXT’s commercial property insurance can help.
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