Buying Commercial Property

[threepiece]

I’m looking for advice here.

I am considering a purchase of property that is zoned GB which I understand means General Business. I am considering moving my shop activity there and selling/restoring antiques. This is in a small town in Indiana.

I really want to know what my operating cost will be, primarily taxes. I have gone to the city planning but they were less than helpful. The property I am considering is new development. There is currently a sewer system being installed. How does someone go about finding tax information for something like this?

[mccutter]

I'm speaking for FL so I can't really advise whether IN is similar.

I'd start at the county website and look into zoning. There you will find EXACTLY what is allowed by the county as far as commercial enterprises. Some commercial and industrial activity may NOT be allowed under your zoning code. If in city limits, they may have their own restrictions. I've attached Pasco Co., FL zoning just to show you there is a difference between C1 and C2--C2 allows more biz activities and has zero setbacks compared to C1. Again, FL is likely different than IN...

Also look into if there is like an BOA (like an HOA) that collects a fee like a condo fee or something. I almost bought a 1000sf business condo that had a monthly fee that included a lease payment to the city. Yes, the condo assoc. had a 99yr lease from the city and all condos paid into it. It wasn't much, I think like $100/month or something...

PS: for tax info, start by entering the address at the Tax Assessor's/Collector's website.
If you will have a large inventory worth a good amount, they may want to collect a "personal" property tax on you also.

PPS: The state may require a tax certificate to be able to collect sales tax.
The city may require yearly permits to operate a biz at a location in city limits for a fee.

[Barks]

Contact the County Assessor. They are usually eager to answer any questions about what, how and why property taxes are determined. Of all tax authorities from the IRS to the local HOA, county assessors have always been the most helpful. (Of course, they're just valuing property, not setting the tax rates). They can tell you what taxes, from what jurisdictions, apply.

[dubby]

The property tax on the building/land itself would be the worst part about that here. But yeah, that would be sorted through the county appraisal district. They should be able to get you a pretty close idea even with it being new property. Ours here likes to "compare" a lot of new builds when they raise rates on our existing property so I'm sure they could easily go the other way with it.

Sales tax is pretty easy to figure out, and the reality is that it costs the consumer, not the business owner. Keep track of it as you collect it and don't spend it. Our system requires it to be paid each quarter. There may be different taxing districts on that as well. We are county only, no city tax because we're outside the city limits.

And, as someone mentioned, you may be taxed on the "stuff" you have inside the building. We have to report various items each year that could be used to make money that has either gone unsold or has actual value that could be sold. At the range, they make us include our conex even though it's the actual building we use for business. If we had a different type of structure it would be excluded. So we're being taxed twice under the property rules for the same thing. Dumb, and you just never really know until the bills start coming in.


Anything with business is going to be more expensive. Our utility rates are higher on a commercial property by almost 4x. A building under lease for a club to hold meetings twice a week uses an average of 342Kwh of electric monthly--almost nothing--and the rates rival my 2/1 house at 1300Kwh/mo. The building itself is at the end of a residential street, served by the same electrical, water, and sewer lines, but because it's zoned business they charge extra. That is actually more painful than the taxes.

[midmosandblasting]

Also need to check renting ability in case you close while still owning it .

[Matt Shade]

Sales tax in Ohio is a pain in the ass, I hope other states are less trouble. They want you to file every 6 months if you are small (hobby level, I can't remember the exact amount) or every month if you gross above the cut off line. That requires you to have an account on the business gateway website and actually file a return each time, with payment due at the time of filing. There also are a lot of gray areas on what is taxable, and they made me acknowledge varying tax rates in different counties even though I was never sure what I was supposed to do with that info.

For property tax in a developing area, I would worry what the future development plan for the area will do to your assessment. If you are the first to move in, I could see your assessment going up substantially if the area gets popular and other businesses start moving in. I deliver hay to a lady with a small horse farm that is landlocked in what is now the the main part of the city. She is unincorporated to the best of my knowledge but the line is both edges of her 5 acres or whatever she has. Her assessment recently went from like 350k to 850K...she's not sure she can stay despite the farm being in her family for 3 generations.

Also look into what the arrangement actually is on sewer and water. Just because they are running lines does not mean they will let you use it. I built a maintenance garage for a township back when I was a superintendent, and we ran 1100 feet of sewer main down the road to the new building. Every house we passed we installed a lateral within the right of way, capped it and buried it. Those houses had to pay a tap fee and go through a bunch of paperwork etc. to be allowed to tie into the new sewer we ran through their property. Tap fees can be significant.

[threepiece]

Well, I think you all have brought some clarity to my sometimes delusional mind. I have recently retired, I should be thinking of ways to simplify my life not complicate it.

I’m going to pass on the commercial property and look for some quiet farm land. Moving all my stuff will be all the complication I can handle.