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Trump's Tax Lawsuit Tests D.C.'s Assessors

Updated on July 9, 2016

Lawsuit Seeks Tax Exemption for Huge Real Estate Project

Presidential candidate Donald Trump's recent lawsuit against the District of Columbia government is renewing debate over how much tax real estate developers should pay when their projects benefit the community.

Trump is suing the D.C. government over the tax bill for the luxury hotel he is developing at the Old Post Office Pavilion, a short walk from the White House.

The suit filed in D.C. Superior Court says the tax bill is unreasonable for the shell of a non-operational building undergoing a massive conversion to a hotel, according to a report by The Legal Forum (www.legal-forum.net).

The lawsuit argues Trump should not be charged taxes because his $200 million renovation is preserving a 114-year-old historic building that otherwise would be useless, maybe even need to be demolished. His costs are higher than normal because of his commitment to preserve historical structures and features and the vast size of the building, says the lawsuit filed by attorneys from the law firm of Arnold & Porter.

The D.C. tax assessor estimated the value of the Old Post Office Pavilion for 2016 at $98 million. Trump’s previous challenge to the assessment reduced the assessed value to $91 million.

His efforts at a further reduction failed before the D.C. Real Property Tax Appeals Commission, which prompted him to seek a judgment through a lawsuit.

His lawsuit says other luxury hotels, such as the Ritz-Carlton in Georgetown, are assessed for taxes at lower rates.

Before Trump started leasing the building from the federal government, it housed federal offices, retail stores and restaurants. It was losing $6 million a year.

His five-star hotel is scheduled to open in September, or two months before what Trump calls the big day of the November presidential election.

The tax on his hotel is called a possessory interest tax, which refers to taxes levied when a government-owned, tax-exempt property benefits a private entity.

Trump’s lawsuit says his hotel redevelopment company, Trump Old Post Office LLC, was billed $1.6 million in possessory interest taxes for 2015 and 2016.

The lawsuit being handled by Arnold & Porter partner William Bosch said D.C.’s tax assessment method for the hotel is flawed.

Presidential candidate Donald Trump seeks a tax exemption for his Washington, D.C. hotel project.

Presidential candidate Donald Trump seeks a tax exemption for his Washington, D.C. hotel project.
Presidential candidate Donald Trump seeks a tax exemption for his Washington, D.C. hotel project.

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