- Who handles it
- Dallas Central Appraisal District, plus the local tax offices that bill the property
- What gets filed
- A yearly rendition listing equipment, furniture, inventory and other business property
- Timing
- Rendition due April 15 for property you owned or controlled on January 1
Common snag: Sellers assume the buyer now owns the tax bill. The bill follows the January 1 owner unless the purchase agreement says otherwise.
The January 1 rule
Texas taxes business personal property based on who owned or controlled it on January 1. That means equipment, furniture, tools, inventory and vehicles used in the business, but not the building.
If you sell in March, you still owned the property on January 1. The appraisal district sends the year's tax to you, even though the buyer is now using every item.
If you sell in December, the same logic applies. The tax for that year follows the owner on the first day, and the following year's bill goes to the new owner.
What a rendition is
A rendition is a yearly report to the Dallas Central Appraisal District listing the business property you held on January 1. It is due April 15, and the district takes it online.
Late, missing or incomplete renditions can bring a penalty. The district's materials describe 10 percent for a late filing, and Texas law allows more when a filing is missing or false.
A sale does not cancel the duty. If you owned the property on January 1 and the deadline has not passed, the filing is still yours, unless you and the buyer agree in writing that the buyer will handle it.
Several tax offices, one property list
In Dallas County, one business address can sit inside more than one taxing unit, such as the city, the county, a school district and others. The appraisal district sets the value, and each unit sets its own rate.
That is why the bill can look different between Dallas, Irving or Garland even for the same equipment. Your CPA can tell you which units apply to your location.
Dividing the bill in the purchase agreement
Most asset sales split the year's property tax between buyer and seller by the day, called prorating. The seller pays through the closing date, and the buyer covers the rest.
Put the method in the purchase agreement, and say who files the rendition and who pays when the bill arrives. Without that, a bill can land on whoever happened to own the equipment on January 1.
- Name the tax year or years covered by the proration
- Say who files the rendition if it is due after closing
- Hold back a small amount if the bill is not out yet
- Agree how the party who gets the bill collects from the other
Tell the district about the sale
Ask the appraisal district how it wants a sale reported, including the sale date and the buyer's name and address. That keeps next year's account in the right hands and avoids notices at your old address.
Buyers also tend to ask for proof that your business property taxes are paid before closing. A clean record speeds up the closing.
Where this fits in a sale
Property tax is one of several local items a buyer's attorney will check. See the certificate of occupancy guide for the city side and the vehicle titling guide for trucks and trailers.
The price you can expect starts with your earnings, not your filings, so ask for a private price range before you plan the paperwork.
This page is general information and not tax or legal advice. Confirm the rules and dates with your CPA, your attorney and the appraisal district before you rely on them.