Hotel Property Tax Appeal

Approach & Results

Client Profile
A CPA firm engaged McGuire Sponsel to carry out a property tax appeal for a historic hotel located in downtown Bozeman, Montana, which was facing challenges with its property tax assessment. Despite a significant recent investment, the hotel was underperforming, and its actual value was lower than the official assessment suggested.

Process
Our property tax team was engaged to appeal the hotel’s property tax assessment to reduce the client’s tax burden. The project commenced in May 2024 and was completed over a two-month period, concluding on July 25, 2024. Our approach involved a comprehensive analysis of the property’s actual condition and financial performance. Our team compiled and presented accurate costs for furniture, fixtures, and equipment (FF&E), provided documentation demonstrating that the building’s condition was not as favorable as the assessment indicated, and utilized the client’s profit and loss statements to illustrate the hotel’s underperformance, directly correlating to a lower property value.

A  challenge arose when the cost method, typically used for hotel valuations, suggested a higher value than the current assessment. Our team skillfully steered discussions away from actual renovation costs, focusing instead on the property’s current condition and financial performance.

Project Results
The property tax appeal yielded substantial benefits for the client. The original assessed value of $38,520,800 was reduced to a newly assessed value of $32,440,900 after the appeal, resulting in a reduction of $6,079,900. This reduction translated to an annual tax savings of $56,661 for the client.