How to Figure Tax Per Square Foot on Commercial Buildings
Unlike residential real estate, commercial real estate is usually valued by looking at the usable square footage. In fact, this is how commercial real estate is usually quoted. This is also how the IRS quotes deductions for taxes. For this reason it is helpful to understand how to compute the tax per square foot on your commercial building. While the tax rate will vary depending on the person and the situation, the method to figure tax rate per square foot at a certain tax rate is fairly easy.
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Instructions
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Determine your tax rate. Your tax rate will depend on the adjusted gross income for your business. As an estimate, use the tax rate you were taxed at last year. Let's say that rate is 30 percent.
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Determine the income per square foot. As tax is based on income, you must first compute your income per square foot. Take the total income for the tax year and divide by the number of square feet in your building. Let's say you own a commercial building with 20,000 square feet and your total income from the property for last year was $100,000. The income per square foot is calculated by dividing the net income for the year by the square footage. In our example, the calculation is "$100,000"/"20,000" = "$5".
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Apply the tax rate to the income per square foot calculation. The equation is "Income per square foot" X "Tax rate"). In our example this equals "$5" X ".30" = "$1.50." This represents your tax per square foot on the property.
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