Ontario Property Tax Project . The largest issue we have faced has been MPAC exploring a switch from the Cost Approach to the Income Approach when assessing self storage properties. This change would affect the value assigned to your property for taxation years 2. We have also been dealing with the issue of Vacancy Rebates and how municipalities have responded to our applications. As we have stated in several emails and mail outs to self storage owners in Ontario, if the Income Approach is implemented incorrectly, we could be facing unfair increases to our property tax expense. Self storage throughout the United States and Canada. Includes corporate profile and information on reserving space. Metal building kits can be customized for any use with unique elevations. Mini Storage; RV Storage; Storage; Warehouses. Other than the anchor bolts and the concrete foundation you plan to build it on. Shipping containers offer a great opportunity for self-storage operators looking to establish or grow a business without the. Ontario Property Tax Committee (O. P. T. C.) has had several meetings and negotiations with MPAC over the past year. Here are some of the major updates and progress: Mid 2. After C. S. S. A. Ontario Property Tax Committee is officially formed and empowered by the C. S. S. A. Board of Directors to review and educate fellow self storage owners and MPAC on whether a Cost or Income Approach should be followed. September 2. 01. 0The C. S. S. A. This initial meeting introduced the C. S. S. A. Information about potential changes to property tax assessment is delivered. March 2. 01. 1Sharing of information amongst self storage operators in Ontario becomes the key strategy for the success of the C. S. S. A. Ontario Property Tax Project. Some examples have been received but we need many more. Finding real examples of self storage businesses operating out of leased premises is vital. It will help us show MPAC that the actual rents we charge can be partially apportioned to real estate, with the balance to our business enterprise value due to the services we provide. Information packages, outlining the issues we are facing in this industry in Ontario is sent out to self storage owners in Ontario. May 2. 01. 1As expected, MPAC sends out a Rental Data Request Form signifying the first step towards a potential change to the Income Approach. The. These were sent to owners who did not fill out the forms or who did not provide MPAC with all of the requested information. Business Plan Pro has been rewritten from the ground up to take advantage of new technologies and to remain current with new trends in business planning.October 1. 8, 2. 01. Meeting with International Property Tax Institute (IPTI) to discuss the challenges facing our industry. IPTI is a not- for- profit and unbiased organization with a goal to advance and foster property taxation and assessment ideals on an international level. October 2. 4, 2. 01. IPTI puts forth a proposal for the development of an appropriate assessment valuation methodology for self storage businesses. This proposal is currently under review by the CSSA. November 2, 2. 01. C. S. S. A. Ontario Property Tax Committee meets with IPTI members in Washington D. C. Based on our findings at the conference, the Cost Approach is the Committee’s primary option as it is the most straightforward and simplest method to determine the taxable assessment value for self storage properties. If the Income Approach is going to move forward, we would need to educate MPAC and make substantial changes to the taxation program and work towards this for 2. The Canadian Self Storage Association . Now we must continue educating MPAC about our industry to ensure that we provide clarity around our reasoning for maintaining the Cost Approach or educating MPAC on how to effectively implement an Income Approach that recognizes the various assets that constitute a self storage business. To achieve this we need to do the following: We need to educate self storage owners on the proper methods of reporting purchases and sales of self storage businesses. MPAC cannot be seen as the only one to blame for the issues regarding self storage assessment and their push to the Income Approach. On numerous occasions, sales of self storage businesses were recorded as one indivisible price and this has led to confusion at MPAC. The tangible (taxable) and intangible (non- taxable) facets of the business were not separated in the transaction. Sales of self storage businesses in the last five years have shown a large difference between assessed values (prepared on the Cost Approach) and sales values. Similar Questions (How to delete storage in my mail account on iPad air2? You'll also need to buy a data plan or 'gift' card. Business Storage Solutions. Conventional Self Storage Facility Storage Container; Copyright. West Los Angeles Mini Storage serving 9004 zip codes. BizMiner Industry Financial Analysis. The Competitive Market Analyzer series offers a narrative industry trend analysis perfect for use in a business plan. The glossary bundle includes a balance sheet glossary. Albans storage facility is not associated with Atlas Van Lines. Action Moving & Storage. Once again this is purely due to the purchase price not being allocated correctly. This large difference has prompted Municipalities to direct MPAC to conduct a review of the valuation method for self storage properties. Because self storage is so unique, we must define our industry in order to fairly deal with MPAC and other government agencies regarding taxation and other similar matters. We are preparing for and endeavouring to help shape MPAC’s next move. We need your continued support to present a united front when dealing with MPAC. Gathering raw data is essential for this C. S. S. A. You, as owners of self storage businesses in Ontario, possess the information that will strengthen our position making it easier to educate MPAC on our industry. We specifically need examples regarding: Leases of buildings, where the storage operator leases the building from an arms- length landlord (we require details of these transactions)Sale of book of business (i. THIS DATA IS OF CRITICAL IMPORTANCE! What is Next for the Canadian Self Storage Association Ontario Property Tax Project? Build bridges with the decision makers at MPAC. Offer ongoing support and education as MPAC decides. See addendum below, for a detailed analysis of how a sales trasaction should be properly structured. In early 2. 01. 2 the C. S. S. A. Gathering raw data and specific examples of: Self storage sales where the business value/other intangibles was separated from the real property. Where a self storage business is operating from a leased building. Continue to establish ourselves as the most important Ontario self storage owners group to deal with MPAC. MPAC must know that we are united. Continue to educate ourselves and our membership by attending conferences, communicating internally, working with policy- shaping experts (ex. IPTI), etc. We will continue to contact and work with industry and valuation experts to define business enterprise value and taxable asset value. As we continue this fight, we may find it necessary and beneficial to engage other experts, such as lobbyists, valuatqrs, lawyers, etc. Addendum: Valuation of Self Storage: What Does the Market Evidence Tell Us? The C. S. S. A. Property Tax Committee has been meeting regularly with MPAC over the past year to address the notion or concept of MPAC changing their valuation approach for self storage businesses. MPAC. The valuation mandate (not taxation mandate) is to use one or more approaches to value . This is a confusing and often misunderstood valuation caveat, particularly where the line between business income and rental income from real property is not clear and succinct. The conflict in understanding and applying the fee simple definition of market value is that self storage properties, historically, do not trade and/or do not have the trades recognized in the context of the bundle of rights. The majority of operating self storage businesses trade, whether recognized or not, with a number of conditions including: i. Fixtures, furnishings, equipment, inventory, supplies, etc. Existing customers that are paying 4- weekly or monthly for the use of their storage unit(s)v. A reputation and/or recognition in the local community or market of the service that is beingoffered (i. An existing roster of current and /or previous customers that use or have used the facility fortheir storage requirementsvii. Existing staff, policies and procedures that allow the operation to retain and/or attractcustomers and to operate efficiently. For graphical depiction of the above please email us at info@cssa. Valuation Flowchart. What Does MPAC See Happening In The Market? MPAC. Historical practice has been to: 1. Allocate 1. 00% of purchase price to land and building. Pay Land Transfer Tax on the entire purchase price; and. Make no distinction or recognition for value of leaseholds in place and/or make any allocation for the business enterprise or other intangible value associated with the business. This has traditionally been the information provided to MPAC from which they make their determination of value. The most common outcome of this exercise is that the recorded purchase price(s) exceed MPAC. Some things to think about are: 1. The entire purchase price should not be allocated to land and building. The sworn value assigned through the land transfer process is not the benchmark for supporting financing. Industry lenders should understand this . Your tax advisor should make it clear what options are available for assigning different parts of the asset to various parts of the balance sheet (i. Industry participants should also be aware from a disposition perspective of the capital gains treatment for real property versus other intangible assets. What is The Cost Approach? The Cost Approach can be simply defined as: Market Value of Land plus the Current replacement Cost of Improvements less All Forms of Depreciation equals Market Value via the Cost Approach. Question: Why does the industry pay more for a self storage business than it costs to build and thereby ignore the principal of substitution? According to the principal of substitution, a prudent buyer would not pay more than the cost to build a like property. In other words one would not spend $2,0. Answer: It does not! The self storage industry is simply not consistent in how it records and recognizes the purchase price, calling it an apple when really it is an orange plus banana. The Canadian Self Storage Association’s Ontario Property Tax Committee is made up of Mr. Scott Allan, CA – Apple Self Storage – Toronto, Ontario, Mr. Bob Langlois – AEC International and is Chaired by Mr. Iqbal Khan, CA – Access Storage, Toronto, Ontario. Business Plan Pro - Business Planning Software Included with your purchase are two best- selling books, research data for 1.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
December 2016
Categories |