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The key to obtaining maximum relief in hotel tax appealsHotels are businesses that include real estate. But, the Assessor should only tax your land and building and not your flag, FF&E or good will. The key to obtaining maximum relief in hotel tax appeals lies in proving to the assessing officials what the value of the land and building is separate and apart from the value of the FF&E and goodwill of the hotel business. Hotels are frequently over-assessed, particularly after a sale has occurred, because the assessment may include the value of the entire hotel business, including the non-taxable assets. Our job is to value only the taxable real estate and to convince the assessing officials our valuation is correct. At Elliott & Associates, we understand hotel valuation. When appealing a hotel assessment, we draw upon our extensive research, data and expertise and come armed with pertinent and persuasive facts and figures. We’ll aggressively pursue appeals to make sure that you are not leaving money on the table. Let our team review your assessment and develop a strategic plan designed to achieve the lowest taxes possible for your hotel. |
"Losing net operating income because of inaccurate assessed valuations was really frustrating. I hired Elliott & Associates who consistently exceeded my expectations. I’m happy to have effective counsel protecting my rights."
DAVID GALOWICH, MADISON REALTY GROUP
PORTFOLIO OF LIMITED SERVICE HOTELS IN COOK AND WILL COUNTIES
Over $6 Million in tax savings and refunds
THE CHALLENGE
A successful hotelier bought, operated and/or sold more than a dozen hotels across northern Illinois. He was using a non-lawyer tax consultant who was a former Cook County assessing official. The consultant represented the client on a number of his Cook County hotels but was reluctant to venture outside of Cook County. The client was concerned he might be leaving money on the table, so he initially hired Elliott & Associates to review and contest the assessments of his Will County hotels.
A successful hotelier bought, operated and/or sold more than a dozen hotels across northern Illinois. He was using a non-lawyer tax consultant who was a former Cook County assessing official. The consultant represented the client on a number of his Cook County hotels but was reluctant to venture outside of Cook County. The client was concerned he might be leaving money on the table, so he initially hired Elliott & Associates to review and contest the assessments of his Will County hotels.
HIGHLIGHTS
- Property Type: Portfolio of limited service hotels in Cook and Will Counties
- Savings: Over $6 Million in tax savings and refunds
- Location: South suburban Cook and Will Counties
- Description: 12 limited service motels
KEY RESULTS
- Conducted valuation analysis to determine valuation of hotels for tax assessment purposes
- Obtained competent appraisals to establish value of hotel real estate only (as distinguished from the value of the hotel business enterprises)
- Substantially reduced assessments causing tax bills to be reduced
- Obtained substantial tax refunds
- Over $6 Million in tax savings and refunds
Our Strategic Approach
Elliott’s review revealed that the tax consultant relied on an appraiser with little experience valuing hotels for tax assessment purposes. The appraiser valued the client’s hotels like any other income-producing property, but failed to properly value the non-taxable business assets and deduct them from the value of the operating hotel business. As a result, the appraiser substantially over-valued the hotels for tax assessment purposes.
The Elliott team reviewed income statements, balance sheets, Star reports and Uniform Franchise Offering Circulars for each of the client’s hotels along with well-respected industry publications containing hotel operating statistics. Armed with this information, Elliott was able to value the hotel business and dissect that value into its component parts: taxable real estate and non-taxable business assets. Elliott then developed a much lower taxable value for each hotel, and then shared that data with knowledgeable appraisers who prepared appraisals that were successfully used to contest assessments.
RESULTS
Elliott filed appeals on the client’s two Will County hotels and, over a six-year period, netted the client tax reductions and refunds of over $90,000 for the two properties.
After the client saw these results, he hired Elliott to review and contest assessments of his Cook County hotels. Elliott properly analyzed each of these hotels, obtained appraisals where necessary and pursued appeals with the Assessor, Board of Review, Property Tax Appeal Board and/or Court. Tax bills for this client’s eight Cook County hotels were reduced dramatically and substantial tax refunds were issued. Over a 7-year period, Elliott obtained assessment/tax reductions and tax refunds of over $6 Million for this client.
