Without a doubt, hotels are among the highest-taxed commercial property in the United States. Indeed, such is the high property taxes paid by hotels that these can account for 40% or more of their cost of occupancy. Yet, the goal to reduce property tax isn’t a high priority among many hotel owners and managers – truly, a costly mistake that can contribute to its red bottom line.
Fortunately, stop the out-of-control property taxes on your hotel by filing a Dekalb commercial property tax appeal.
Understand the Implications of Purchase
Keep in mind that property taxes are of significant importance in the purchase of commercial assets and, in fact, are a tricky issue in underwriting them. Even before you purchase a hotel, you should have a deep understanding of its implications on your future tax liability. You must first, research about the historical assessments and tax rates in the county and state, and second, know about the local tax assessors’ valuation methods as applied to hotels and the like, as well as the reassessment cycle.
These matters will have a significant bearing on your purchase. The sales price will likely have an impact on its assessed value, as determined by the tax assessors, while new construction (i.e., extensions) and renovations can affect the timing of supplemental property assessments. You may, for example, postpone a purchase for its tax benefits.
During your research, you should also gain an understanding of the assessment rules and regulations including the appeal process in the jurisdiction. You will have more opportunities to reduce property tax because you have taken advantage of the Dekalb commercial property tax appeal process, year in and year out.
Better yet, you should hire an experienced tax reduction consultant to handle appeal-related matters. You, as the owner and/or manager, can then focus your efforts on other important matters of management.
Understand Your Commercial Property Inside and Out
You may have little control over the valuation methodology used by the county tax assessors and the tax rate imposed by the county tax commissioner. But you have control over your commercial property so your best bet is to focus on it more.
Your first step is to know your commercial property inside and out. What are its exact dimensions? What is its floor area? What are its facilities and amenities? What are the aspects of its physical structure and facilities that can reduce its fair market value, even contribute to its functional obsolescence.
When you know these things, you will have a keener eye for spotting the errors made by the county tax assessors in their assessment of your hotel’s value. Bear in mind, too, that the tax assessors have to perform valuation procedures on hundreds of thousands of parcels in their jurisdiction. Thus, there will be errors committed, which will be reflected on the property records.
You must then look at your hotel’s property record – you can request for it, either via verbal or written request – and check whether there are errors in it. Your careful review will likely reveal that there are errors reflected on the property card in relation to the property’s actual conditions. These can include total square footage, age, hotel occupancy including periods of full and limited service, and functional obsolescence. Other aspects that you can look into are real estate transfer taxes, economic conditions, and new property assessments reflected as in increase in your assessment.
If these things to reduce property tax seem too much on your plate, you can always hire Fair Assessments, LLC, an experienced tax reduction consultant, to take on the heavy job of a Dekalb commercial property tax appeal.
