Business Listings - How are leasehold and building improvements reported?

Leasehold and building improvements are improvements or alterations made to support business operations. They are reported because some improvements are not included in the real estate value and are instead taxable as personal property. This applies to both tenant installed improvements and building owner improvements that are personal in nature.

Certain improvements are generally considered personal property and must be reported on the business personal property listing when they are not included in the real estate assessment. Examples include security, telephone, and alarm systems; kitchen equipment; millwork; shelving; furnishings attached to the building; heating or air conditioning systems for special purpose areas; and items such as coolers, specialized piping, and similar equipment.

Other improvements are typically included in the real estate valuation and should not be reported as personal property. These commonly include floor coverings, wall coverings, ceilings, normal lighting, standard heating and air conditioning systems, sprinkler systems, paving, fencing, and area lighting.

To help ensure proper classification, leasehold and building improvements should be itemized as clearly as possible. Only improvements placed in service during the most recent year should be listed for the current filing period.

Property owners may also review the property classification schedule in the Schedule of Values to help determine whether property is considered real or personal property in Wake County.

If you are unsure how a specific improvement should be reported, contacting the Tax Administration office for assistance is recommended.