By Ward Richmond & Liam Logan
The other day, we were sitting in our weekly Monday morning team meeting and one of our newest team members, GSW Submarket specialist, Liam Logan, asked me, “What are all of the benefits of Triple Freeport?”
My eyes immediately glazed over.
I responded with: “Did you ever think about the fact Liam Logan might be one of the best “sales guy” names ever?!”
In case you didn’t know: Talking about tax exemptions is not something I typically like to do! Who does? Nevertheless, our Team’s new MO is that if we don’t really know the answer to something, we are going to figure it out and write a motherflippin’ blog about it!
We hope you enjoy our take on the Triple Freeport exemption and find this informative and helpful!
Slow down there, Chief. Let’s start with “What does Freeport mean?”
Administered by the Texas Comptroller of Accounts, the Freeport Exemption is a business personal property tax exemption on inventory that is held within the State of Texas for 175 days or less from the date they were manufactured in, acquired in or transported into the State.
Ok, so now, let’s investigate the original question, “What does “Triple Freeport” mean?”
The tax break offered by the Freeport Exemption can be most valuable to distributors when their industrial property falls within a Triple Freeport zone. This provides qualified distributors with inventory tax exemptions at the 1) City, 2) County and 3) School District levels.
Get it? In a Triple Freeport zone, there are three different taxing entities that provide you with an exemption, hence the “Triple” in “Triple Freeport.” If it were up to me, this would be called “The Jackpot Zone” because you have the ability to get a tax break from all three local tax authorities!
If you happen to be wondering, “Why in the world would they provide me with a tax break?” You must not be from Texas. In Texas, we are extremely pro-business and we like to look at the big picture. This is just another great reason for you to consider opening up your new distribution hub in the great state of Texas!
Sometimes we like to answer questions with questions!
If you answered YES, you’re lookin’ good!
YES? You’re almost there!
Did you answer YES to Questions 1-3? WINNER WINNER CHICKEN DINNER!
SORRY PAL- You Just qualified for the GIANT ZERO Freeport Exemption and you are paying those inventory taxes. That’s OK though because you oil barons make enough money as it is!
Fun Fact For Qualifying Tenants: Although Tenant’s can greatly benefit from the Freeport Exemption, Landlord’s do not typically charge a premium for space located within these jurisdictions. Furthermore, developers are typically not charged a premium for land that falls within these jurisdictions.
Drumroll………. It depends. If you are transporting goods (not gasoline, etc.) from your Texas warehouse to somewhere outside of the State of Texas in less than 175 days then you can do one of the following to calculate your potential tax exemptions:
Example: $10,000,000 x 1.2% = $120,000 in savings! Boom! We may have just saved you $120K!
Despite what we just told you, Freeport tax exemptions do not magically appear out of thin air.
Like anything else related to taxes and the government and “Obama”, you need to fill out forms.
Depending on how many square feet you lease, Liam might offer to help you fill out these forms if you let him represent you but you’re probably better off calling someone like The Kurz Group (add link) to help with the application process which must take place each year if you want to keep your tax breaks in place.
Additional information can be found at https://businessintexas.com/services/tax-incentives or the folks at Kurz Group, Inc. who wrote this awesome blog where we gathered a lot of this information:
Our team at Colliers International works closely with tenants and developers around the globe to develop and execute world-class real estate strategies utilizing our global team of logistics and transportation real estate specialists. Our team provides best in class Site Selection services including Supply Chain Consulting, Labor Analytics, Build-to-Suit Project Management and Economic Incentive Negotiation services.