Do I Owe Taxes on Business Property of a Closed Business?

Your tax responsibilities don't end when your business closes. After you shut your company's doors, you still have to settle any remaining tax debts, such as collected but unpaid sales tax. If your business still owns any real estate or other taxable property, you have to keep paying until the company disposes of its assets.

Property Taxes

  1. States base personal and real-estate property taxes for a given year on the assessed value of the property as of Jan. 1. The taxes on your business personal property, such as furniture, vehicles or computers, are always due in full for the year, even if you close the business Jan. 2. Taxes on land, on the other hand, are prorated: If you sell off your business real estate Jan. 2, you only owe for one day.


  1. What happens after you close your company depends in part on its business structure. With a sole proprietorship, legally you are the business: If you close your doors but you still own the company's real or personal property, it's taxable until you dispose of it. If you file to dissolve a corporation, the corporation continues existing until its affairs are wrapped up. The corporation keeps paying taxes on property until it sells the assets or divides them among the shareholders.


  1. If you sell off your business property after you close, you pay taxes on the property just as if you'd sold it while the company was a going concern. Many of your business assets, such as vehicles or real estate, are subject to capital gains taxes. Capital gain or loss is based on the difference between the purchase price and the sale price, factoring in adjustments such as advertising and depreciation.


  1. If you file Chapter 7 bankruptcy, that liquidates your business. The company closes and a court-appointed trustee sells off all your business assets to pay your creditors. Bankruptcy discharges -- wipes out -- your company's remaining unpaid debts, but some taxes survive bankruptcy. To discharge property taxes, the bill must have come due at least a year before you file Chapter 7. If the government has filed a lien on your business property, bankruptcy won't remove the lien even if bankruptcy discharges the debt.