Business and Personal Property
The California Constitution states that "all property is taxable (assessable) unless exempt" by the Constitution or statutes. This taxable property may be defined as real property and personal property.
Business Personal Property includes all supplies, equipment and any fixtures used in the operation of a business. Exempt from reporting are business inventory, application software and licensed vehicles (except Special Equipment (SE) tagged and off-road vehicles). SE tagged and off-road vehicles and equipment are taxable personal property and must be reported.
Boats and aircraft are also taxable and are subject to annual appraisal. Assessed values are determined by reviewing sales of comparable boats and airplanes.
Owners are required to file an annual Business Property Statement with the Assessor reporting details to help in establishing the value of the business, aircraft or boats.
Lien Date - 12:01 am, January 1
Aircraft Property Statement Due - 5pm, April 1
Vessel Property Statement Due - 5pm, April 1
Business Property Statement Due - May 8 (May 7 is a Sunday this year so due date will be Monday, May 8).
Business Property, Aircraft and Vessels Taxes Due - 5pm, August 31
Notice to File a Business Property Statement
Why You Received a Notice to File Letter
In an effort to minimize paper, save costs and maximize efficiency for your business and our office, the Assessor is no longer mailing paper Business Property Statement forms to Nevada County Businesses.
Business owners will now receive a "Notice to File" letter with the information they need to file their Business Property Statements electronically.
The Notice to File Your Business Property Statement letter contains the unique password and login information for your business. You may receive multiple letters if you have more than one business.
Who Receives a Notice to File Letter?
A Notice to File a Business Property Statement is mailed to any business that our records indicate was in business on the January 1st Lien Date. The Assessor is required to assess any taxable business personal property in your possession as of 12:01 a.m. on that date.
Businesses can file their Business Property Statements electronically, or by filing out a paper form. Once you are logged into the eFile system, you have the option to file your Business Property Statement Form electronically or print the official form to fill out, sign, and mail into our office. You may also request a Business Property Statement form from our office.
There are many advantages to electronically filing (eFile system). One of the biggest advantages is that once a business enters the prior year acquisition cost information into the eFile system, the information will automatically carry forward each year, saving the business time and resources. Another advantage is that the business will receive a confirmation that their Business Property Statement has successfully been filed giving the business owner peace of mind.
Filing And Mailing a Paper Statement
Businesses may choose to download and file a paper form. Please note that all information, including prior year costs, will have to be entered on the form every year. Paper forms must be filled out, signed and post marked or delivered to our office by the May 7 deadline or they will be considered late and subject to a 10% penalty.
Who must file
If the Assessor sends you a notice to file, the law requires that you either eFile your statement, or complete, sign and return a paper statement to the Assessor's Office by the May 7 deadline.
Any business that owns Personal Property and/or Fixtures having a total combined cost of $100,000 or more is required to file a Business Property Statement even if the Assessor does not request that you file one.
You still are required to complete the Business Property Statement even if you are an exempt organization.
Please contact the Exemption Section at (530)265-1232 to verify your exempt status or to file an exemption claim.
How to File
Information about how to report equipment owned by you, or others, plus how to report businesses that have sold or closed, getting help with filing and more.
Taxable Business Personal Property
What is taxed
Machinery, equipment, tools, furniture, fixtures, and leasehold improvements held or used in connection with a trade or business are taxable. In addition, most boats, aircraft and mobile homes are also taxable. Supplies on hand, demonstration equipment, and construction in-progress are also assessable.
All costs before trade-in should be reported whether capitalized, expensed, or fully depreciated.
Inventory held for sale, application software and licensed vehicles are not taxable.
Examples of reportable property
Some of the property that must be reported includes:
- Computers, printers, servers
- Copiers and fax machines
- Office furniture
- Restaurant Equipment
- Storage Tanks
- Video Equipment
Unlike real property in California, business property and taxable personal property are appraised annually at full market value. Several types of property statements are used to assist the Assessor to determine the taxable value of business and personal property.
[Revenue and Taxation Code 469]
Aircraft Personal Business Property
According to California Law, airplanes and other aircraft are taxable and are subject to annual appraisal. Owners are required to file an annual Aircraft Property Statement with the Assessor providing details about the aircraft
Vessel Personal Business Property
According to California Law, vessels and personal watercraft (boats) are taxable and are subject to annual appraisal. Owners are required to file an annual Vessel Property Statement with the Assessor if cost of boat is over $100,000 providing details about the boat used in the valuing process.
You may also receive a Vessel Property Questionnaire from our office; the Vessel Property Questionnaire is used to ascertain primary boat situs and information about the boat such as the year, make, model and condition of the boat. This information is used to assess the current market value for tax purposes. If the Vessel Property Questionnaire is not returned to us in a timely manner, we may send out a “Second Request" Vessel Property Questionnaire and / or a Vessel Property Statement.
California's property tax rate is 1% of assessed value (also applies to real property) plus any bonded indebtedness voted in by the taxpayers.
Amount Owed With This Assessment
The amount of taxes you will owe will depend on the amount of the assessment and the specific tax rate in your area. For example, if your personal property is assessed for $10,000, your personal property tax bill should be roughly $110.00 to $120.00.
How Often the Tax Must be Paid
This is an annual tax, due on August 31st of each year.
[Revenue and Taxation Code Section 441]
How the Taxes are Used
Approximately 56% of the property tax dollars are used to support junior colleges and Kindergarten through 12th Grade schools, 30% is allocated to city government and other special districts, while 14% is allocated to support county government. You can learn more about how personal property taxes are used by going to the Nevada County Auditor-Controller's Property Tax page.
Why You Have to Pay Taxes on Business Property
The California Constitution states in part that, "Unless otherwise provided by this Constitution or the laws of the US, (a) All property is taxable". That is, unless otherwise exempted, all forms of tangible property are taxable in California and the Assessor is required to assess business personal property.
[Revenue and Taxation Code Section 441]
How Assessed Value of Business Property is Determined
The Assessor is required to annually assess most taxable personal property at 100% of its fair market value as of the lien date. There are several ways to determine the value of Business Property.
The annual Business Property Statement is used for reporting all business equipment, supplies and fixtures for each business location along with other important information. The information provided on the statement is used to assess and tax property in accordance with California State Law.
The Assessor often trends forward actual owner-reported costs to a present replacement cost estimate using trending tables provided by the State Board of equalization (or developed in-house). We then reduce the trended costs to reflect normal or actual depreciation to determine a market value estimate.
The Assessor often relies on various trade publications and "Blue Books" that provide current, open market sales price and/or cost data for aircraft and boats.
Note that unlike most real property which is assessed under Proposition 13, most personal property does not fall under Prop 13's umbrella (although it does enjoy the same, maximum 1 per cent tax rate). The only exception is personal property "fixtures," which are defined as real property for property tax purposes and are subject to Proposition 13 restrictions. Fixtures are not subject to Supplemental Assessment.
Business Property Statement Terms
The lien date is January 1 every year, and is also the date property taxes for any fiscal year become a lien against a business property owner. Where personal property is concerned, the lien is placed on the owner of the personal property (not the real property).
Any item that you are consuming in your business, such as office supplies, pencils, paper, calculator tape, stationary, envelopes, cleaning supplies, fuel, etc., are considered to be a supply item.
If you are a manufacturer, "supplies" would not include anything that becomes part of the finished product. Materials or supplies that are integrated into the products you market are exempt because they become business inventory once in the products, and business inventory is exempt from property taxation.
Closing or Selling Your Business
If You Sell or Close Your Business Before January 1
On the back side of the Notice to File letter there will be a "Notice of Business Sold, Closed or Moved Out of Nevada County form" which can be completed and returned to our office. You may also notify us by completing an E-File Business / Agricultural Statement of Change form. Please contact our office if you have questions or need additional information if you have sold or closed business before January 1.
If the business has been sold, indicate the new owner's name, address, date of sale, and sales price of the equipment, furniture, and fixtures.
If the business has closed, indicate the date the business closed under "Date of Sale". Also indicate how the business property was disposed of. Any business property that you retain may still be assessable and you may still get a Notice to File a Business Property Statement and may still be required to file.
Note that if you receive a Notice to File letter from the Assessor and your business is no longer in operation, do not ignore the notice because you are still required to file even if it is just to notify us of the change in your business. If you receive a Notice to File, log into the eFile system and note that the business has closed and/or complete the backside of the Notice to File letter and return to our office before the May 7th deadline.
See Filing Your Business Property Statement for more information.
Note: Where a business has closed but you still own equipment previously used in the business, it may still be taxable despite the fact the business is closed. If the equipment you still own can be converted to household uses (that is, could become your personal effects), then it may not be assessable on the following January 1 lien date.
If You Sold or Closed Your Business After January 1
All property is assessable to the owner as of the lien date. The lien date is the date that property taxes for any fiscal year become a lien against a property owner.
The law specifies that all taxable personal property must be assessed as of a specific point in time, and that point is precisely at 12:01 a.m. January 1 (regardless of what transpires after that date). Even if closed shortly after the lien date, a business must still file a Business Property Statement and pay taxes for the coming fiscal year on any taxable property they owned on the lien date.