How Do Property Taxes Work for Hospitality Businesses?

The hospitality industry has taken a major hit in 2020, and there’s no end in sight. When you consider that hotels are some of the highest-taxed commercial properties in the United States, if you own one, you might be looking at a property tax bill that you simply cannot pay.

Many hotel and hospitality business owners don’t realize that they can appeal their hospitality property tax in Georgia. Here are tips to keep your property taxes under control:

  • Research before you acquire: When you’re getting ready to acquire a hotel, do your due diligence. Research the property’s tax rate history, as well as the assessed value of comparable nearby properties. Because taxes can make up around 40 percent of your cost of occupancy, you want to make sure you choose your property wisely.
  • Always critically evaluate your property tax assessment: Look at your assessment very carefully for errors—they can range from typos to significant mismeasurements of property size. The assessment might get the features wrong (for example, listing 100 guest rooms instead of 110) or have mistakes in the lot or location description. These errors can contribute to improper assessed value, and will make it easier if you need to appeal.
  • Don’t confuse property tax value with investment or market value: Your property tax value is different from the market value. Property tax assessments describe the value of the property itself—not the investment value as a business. Make sure that you know the difference and that your assessment letter reflects that.
  • Understand real estate transfer taxes: Find out if your jurisdiction uses real estate transfer taxes, and be sure to factor them into your acquisition analysis. Will they apply to your hospitality business? If so, sometimes investors can separate the real property value from the tangible and intangible personal property value, lowering their transfer tax liability.
  • Learn more about assessment procedures in your area: Become familiar with your municipality’s tax assessment procedure. How and when are they conducted? How can you appeal, and what’s required?
  • Work with a commercial property tax mediation firm: Most commercial property owners are busy with the other demands of their business—and since appealing your commercial property taxes can be a long, time-consuming process, it makes sense to hire a firm to handle the appeal for you.

Whether you’re already a hotel or hospitality business owner or are considering a new investment while property values are down, it behooves you to understand how property taxes affect your investment—and how to appeal them when necessary.

When you need help appealing property taxes for hotels in Georgia, working with Property Tax Eagle of Georgia, LLC is your best option. We specialize in commercial property tax mediation, helping clients lower their property tax bills whenever possible. Let us answer your questions and help you through the appeals process so you can enjoy a fair tax rate—you’ll never overpay again when you work with us. Reach out to us today to get started with a consultation.

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