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Why your hotel assessment should always be less than market value.
When hoteliers receive their annual assessment notice for property taxes they often ask, is this the proper assessment? For most people in Canada the issue ends there. You can’t fight city hall, right?

In Alberta however, there are rigorous property tax agents who keep the assessments fair and equitable. Alberta hoteliers therefore have a better than average chance of having their assessment question answered. Tax agents can provide this service, usually on a contingency basis (ie: payment from tax savings only).

What they look for are inconsistencies in the assessment. Spotting inequities involves an analysis of the assessor’s calculations and a comparison with the operating statements of the hotel. Some items are not intended to attract a property tax and should be eliminated from the business profit of the hotel. Adjustments are required for, among other things, furniture fixtures and equipment. RevPar must reflect the industry average and may be increased or decreased by the assessor to reflect the municipality’s opinion of the property’s management.

Since these adjustments tend to be influenced by the assessor’s opinions, a comparison with the assessments of other similar properties is a valuable tool in the tax agent’s kit. At the end of the day however, the lodging industry should never be assessed at the amount of the market value of the property! The percentage of value that is correct ranges from 95% down to 70% for larger properties. In light of the shifting fortunes of the accommodation industry, there may be a greater efficiency and appropriate tax savings in a finely tuned assessment. A professional tax agent helps you create tax strategies that increase your property value.

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