Are gas station canopies taxed as real estate?

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Pennsylvania municipalities and school districts impose local property taxes on real estate owners. The Commonwealth Court of Pennsylvania, in an appeal by a gas station operator, has held that lighted canopies can be taxed as real estate.

The property at issue consisted of a one-story building, parking area, and lighted canopy over gas pumps. Canopies are large metal structures fabricated off site and then mounted on pillars bolted into poured concrete foundations. Although they weigh between 20 and 35 tons each, the canopies are moveable and the station operator proved that they are sometimes relocated from one store to another. The taxing authority claimed that the canopies are real estate because they are attached to the concrete foundations. The owner claimed that they are personal property, and thus not subject to property tax because they are detachable.

On appeal, the court found that the canopies are taxable as real estate because they are fixtures. While they can be removed, the court noted that modern construction methods allow component materials and whole structures to be removed with new ease.

The court also observed that gas station owners often challenge zoning limits on canopy construction and size, claiming that canopies are essential to the operation of a gas station. Finally, the court concluded that while it was possible to move the canopy, there was no reason to believe that the owner intended to do so. In fact, logic dictated that he would leave the canopy in place until it was worn out or until he discontinued the use of the property as a gas station.

Moveable improvements to your real estate may be considered fixtures and could materially increase your property tax assessment. Consider whether a moveable structure or improvement can be moved easily. Trailers on wheels are considered personal property, while trailers on foundations are taxed as real estate. Ease of relocation is a factor in determining taxability. Be aware that your actual purpose in acquiring the improvement will be central to the inquiry in a tax assessment. If your intended use is temporary or secondary to your main use of the real estate, then you may be able to avoid increased real estate taxes.