Over the last few years, things have been difficult for the Alberta hotel industry, starting with the struggling oil and gas industry and now with the onset of the COVID-19 pandemic. To weather the storm, hotels must minimize expenses. One of the biggest is municipal and provincial property taxes.
The AHLA partnered with real estate services firm Altus Group last week to present a webinar to help Alberta hotels understand the assessment and property tax system in our province and to identify steps that they can take immediately to address property taxation expenses.
A few key learnings from the webinar were:
- Property assessments reflect the value of your property as of July 1 of the preceding year.
- In order to calculate your property assessment, assessors calculate your stabilized income over the past three years. If there are any abnormal variances, they adjust using industry averages. They then make allowances to deduct out furniture, fixtures, and equipment (FF&E); capital reserves; and business intangibles.
- Each year, municipal assessors mail out Assessment Requests for Information (ARFIs). It is important that you respond to these in a timely fashion. ARFIs help assessors to calculate your assessment and, in the event that you are unhappy with the assessed value, responding also preserves your right of complaint.
- This year, it is crucial that you report your income and expenses up to July 1, 2020 so that the negative impacts associated with COVID-19 and the downturn in the oil and gas industry are properly reflected in your upcoming assessment.
- Municipalities are required to balance the books every year, which means they cannot offer tax forgiveness to individuals or businesses. However, many municipalities have implemented a deferral program in light of COVID-19. Altus Group is monitoring these deferral programs on their website.