Question about CLA article in The Journal

[Elizabeth]

Or rather, a request for clarification.

In the Feb 2001 issue, there was an article on purchasing laundromats and what paperwork to ask for so as to accurately assess the cost.

I can see the practicality of almost everything they recommended except for the copy of personal property taxes of the owner.

Why would these be needed? Don't those just apply to his/her home? Or do those also apply to the commercial property?

Do you incur property taxes on a commercial property that you don't own? Or is it based on the city/county where you live?

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I've never owned property before so I'm afraid I'm a little stumped.

Thanks,
Elizabeth

[PeterH]

They are needed to verify income. If you don't have them, how do you know the truth is being told? How do you know the taxes on the business are being paid?

[Elizabeth]

What do they look like? Is it like looking at a 1040? Or is it a pain to read?
Is it more difficult to verify income if they have a couple of jobs?

[milltie1]

In some states or municipalities, the equipment value (contents of laundry) are taxed, this is probably where they are coming from in the article or the article might have been referring to laundries where owner also owns the building/property.

[aromaz]

Personal property is sometimes called tangible personal property. It's everything you own in the business, from pencils to equipment, to the build-out. In some states, like Florida, it's taxed at almost the same millage as real property. The personal property tax bill looks just like a real property tax bill.

[SecretarytoBraveDave]

Do a google search for the county the property is in, many counties list the property tax info online, assessible to anyone.

[Fred]

Elizabeth,

In my state, Calif., we pay personal property taxes on business equipment. The real estate taxes are paid by the owner of the real estate, i.e., the landlord. The taxes are then billed to the business owner and are included in common area reconciliations.

In Calif., escrows for business purchases are handled by Title Companies whose responsibility it is to be sure that all tax levys on the business are current and have been paid. Other states use attorneys to handle escrows.

If you are buying directly from a laundromat owner, you may be doing yourself a disservice unless you are experienced in purchasing a business because you may overlook many other important things to look for. A good business broker is invaluable.

I am not a broker, but I have bought 4 laundromats directly from the sellers. All the escrows were handled by escrow agents experienced in business sales.;)