Martin Lutsky

Principal

Two Steps Forward, One Step Back: The Pandemic’s Effect on Real Property Taxes for Property Owners, Operators and Tenants

There have been plenty of articles published over the past several months to highlight the economic stress that the hospitality industry has been experiencing.  Almost daily articles released by Hotel News Now (HNN) highlight the negative effects the pandemic is causing – more like: “two steps forward, followed by one step back.”  Articles stressing the positives are often countered by those that identify the dramatic decline in occupancy and the average daily rate, the number of jobs lost, and the number of closed properties that may never reopen and will be redeveloped for residential, senior living, or student housing.  The positives in a recent HNN article titled “Deals Expected to Pick Up with Bid-Ask Spread Closing” are quickly countered as pricing discounts and purchases for redevelopment to discontinue operation as a hotel are discussed within.

Controlling costs has always been important but even more so today, with real estate taxes accounting for a significant portion of operating expenses.  A hotel’s property tax burden, either real or personal, is based on an assessment which is a point in time opinion of value.  In today’s economic environment, a proactive review of the assessments is extremely important to providing the potential to correct the assessment and reduce the resulting tax liability.  However, managing this process of valuing the property, filing the appeal, attending hearings, and fighting for a fair and reasonable assessment is both complex and time consuming.

How Can the Clearview Group’s State & Local Tax Practice Help Your Organization Reduce Real Property Tax Liabilities?

Clearview’s dedicated property tax professionals have decades of experience helping property owners, operators, and tenants navigate the appeals process to reduce values and secure tax savings. These services are designed to achieve current savings and future benefits through:

Contingent Fee Assessment Appeals

Our State & Local Tax team will review your assessments to gain an understanding of the valuation models used by the assessor.  We will develop our own opinion of value to build an appeal for how an assessment is overstated, presenting our case to the jurisdiction and working with the Assessor or Appeals Board to secure requested reductions and resultant tax savings for you organization.  Since Clearview’s real estate assessment appeals typically operate on a contingent fee basis, there are no costs associated with our services until we are successful in identifying tax savings for you.

Prepare or Review Income Questionnaires

Taxing jurisdictions may require property owners to respond to income questionnaires which are used by assessors in developing an assessed value for the real estate.  These questionnaires can be general in nature and don’t specifically address all those factors that impact the value of your property.  We are available to review your response to these and assist by providing guidance in highlighting those factors that the taxing authority needs to develop a fair and reasonable assessment.

Acquisition Review, Tax Projection, and Annual Tax Estimates

Our State & Local Tax practice is equipped to aid with pre-acquisition analysis identifying a jurisdiction’s tax practice and policies and providing tax projections for those making purchase decisions.

How Has Clearview Provided Value to a Previous Property Tax Client?

Clearview’s State & Local Tax practice achieved a significant reduction in a specialty property following its acquisition building an argument that valued the real estate and not the business or enterprise value.  Our approach was to identify and separate the purchase price into the three components: the real estate, the personal property and the business. We also assisted in securing a partial tax exemption for one of the business activities which resulted in a three-year tax savings of $557,270.

For more information regarding our Real Property Tax services, contact Clearview Group at content@cviewllc.com.

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