Ah, January – A time to start anew. Maybe you’ve resolved to save more money, start eating healthier, or take up a new hobby. New Year’s resolutions are one thing many people dread this time of year. Another sure sign of the new year is your yearly B.C. Assessment notice, arriving in your mailbox the first week of January.
B.C. Assessment is the provincial crown corporation charged with valuing all the real property in the province, for the purposes of completing an assessment roll, which in turn your municipal government uses to calculate your property tax bill, due in July.
What does your B.C. Assessment value mean? Well, BCA says that it is supposed to represent your property’s market value, that is, the amount at which it would likely sell for given an arms-length transaction and reasonable exposure to the market, as of July 1 of the previous year. In actual practice, this is probably not accurate. Historically, you’d find that B.C. Assessment values were quite a bit below the actual market values, but I’ve noticed in recent years that they’ve been increasing to a more true-to-market level.
This year, in Sooke, I’m hearing from clients and colleagues that values have increased, some dramatically (including mine). But I’m not worried too much about increased taxes. Just because your B.C. Assessment value goes up, does not necessarily translate to increased taxes.
The question of whether your taxes will go up or down is up to your municipality. Each April or so, the municipality finalizes its budget. They take the amount of money (which also includes levies from other jurisdictions that your municipality pays on your behalf (ambulance, school, CRD, Transit, recycling, etc) and then divide it into the total assessed value of all properties in the municipality (which they get from B.C. Assessement). This gives them the mill rate, which is expressed in dollars per thousand dollars of assessed value.
Let’s take an example. Whoville’s staff and council have calculated a total tax bill of $2M. The total assessed value of all properties in Whoville is $320M (as per Seussland Assessment, of course!)
$2M/$320M = $0.00625 (per dollar) x 1000 = $6.25 per $1000 of assessed value.
Cindy-lou Who’s house is assessed at $200,000, therefore she pays 6.25×200 = $1250 in taxes this year.
Now, when you get your assessment in the mail, you’ll want to pull it up online at BC Assessment’s website and compare it to similar houses on your street. If you find your assessment to be out of line with your neighbour’s whose home is similar to yours in age and size and condition, then this might be a case to dispute it. It’s only when your property assessment is proportionally different, ie, much higher or lower than similar properties, that your taxes will increase or decrease more than the normal annual increase.
It’s also important to note that when you hear in the news “Sooke taxes to be up 5% this year” That is often only the municipal portion. This doesn’t necessarily mean your WHOLE tax bill will go up that much. For example, a couple years ago, they said Sooke’s taxes were going up 20% , but Sooke’s portion of my taxes was the smallest portion of the tax bill. The total increase was about $50.
As for assessed values vs home prices? They often have very little to do with market value. Assessed values are supposed to reflect market value as of July 1st of the previous year, but BC assessment doesn’t physically visit each home in the province. They use sales data, municipal building permit records (an addition, for example would add value to your home) and computer models to adjust the assessment rolls each year. I’ve seen houses sold for far under their assessed values, and far over. There is certainly no “rule-of-thumb” percentage above assessed value that you should ask for your home. Any REALTOR® that tells you that is either lazy, unskilled, or both.
If you have any questions, contact me, or put them in the comments below!
Happy New Year!
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