No tax relief without law change for strata hotel owners 

The owner of a local strata-hotel unit, representing a group of more than 1,200 strata owners in Whistler, is fed up by the lack of progress by the provincial government in resolving a taxation issue that stems from 1994 changes to the Property Tax Act.

According to Craig East, who owns and rents units in the Whistler Village Inn and Suites, people who own units in strata hotels continue to be overtaxed in comparison to Whistler’s "real" hotel properties, despite the fact that these properties are run as hotels for the majority of the time.

"They look like hotels, they certainly function like hotels, but they’re taxed like commercial properties," says East.

"What we’re trying to do is make sure all the parties know we’re interested in trying to work and find a solution. The middle ground is somewhere."

The government currently taxes real hotels based on income instead of assessed property value, because the hotels don’t change hands often enough to determine what their market value is.

Strata hotels are taxed based on their property values, which are easier to determine as they are bought and sold regularly on the open market.

The problem is that the assessor applies the same mil-rate at $19.53 (dollar value out of $100 assessed value) to both real hotels and strata hotels, while strata rooms are valued higher. As a result, room for room, strata owners are paying higher taxes.

In addition, within the strata hotel class East believes you can break down the value into closely held stratas, where one or more companies own the majority of the units and run them like hotel rooms, and widely held stratas, where there are many owners. The strata hotels with few owners don’t see rooms trade hands as often as strata hotels with several owners, and their rates are also lower as a result.

Furthermore, there are several properties acting as hotels that fall under the Class 1 assessment for residential properties, rather than Class 6 for Commercial properties, and are therefore assessed at a residential mil-rate that is around $7.

As a result Class 1 widely-held stratas, Class 6 closely held stratas and Class 6 real hotels all have lower average per-unit taxes than properties within Class 6 widely-held properties.

East acknowledges that it’s a complex issue, and that the province is wary of changing a law that could result in existing properties and developers changing their status in order to pay lower taxes.

He believes there are two possible solutions to the issue. The first is to create a subclass within Class 6 that applies equally to all strata hotel properties, even those currently listed as Class 1, and apply a separate mil-rate of $12 or $13. East believes this will level the playing field between the different types of strata hotels, and between strata hotels and real hotels.

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