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B.C. Property Tax and You: Guard Against Inaccurate Assessments

06/12/2018


By Inder Nijjar, B.Comm, PGCV, RI

Are you paying more than your share of property taxes? That depends on whether your property is accurately assessed. Last year, the British Columbia Assessment Authority (BC Assessment) assessed over two million properties. With this volume of properties, an individual analysis of each property is not possible: instead, BC Assessment relies on mass appraisal methods to determine annual assessed values.

What this means for property owners is the assessed value may not reflect the specific characteristics of each property. Often this can lead to inaccurate assessments, which in turn can result in paying more than your fair share of property taxes.

In early January 2019, BC Assessment will mail out property assessment notices to all property owners in the province. The assessed value on these notices is a part of the equation used to determine your property tax liability come July 2019. If a property owner disagrees with the assessed value, they will have until January 31, 2019 to file a formal appeal.

In many instances, property owners do not realize the impact of the assessed value changes on their taxes until they receive their tax bill. Unfortunately, at that time it is too late to review or dispute the assessed value.

New for 2019

This upcoming assessment year in B.C. is further complicated with the addition of new property taxes. This includes the Vacancy Tax, School Tax Surcharge, and Speculation Tax. In many instances, these can result in residential development land properties paying property tax at a higher rate than commercial properties.

Developers with residential properties may be eligible or could become eligible for one of the relevant exemptions. Each property needs to be reviewed to determine if it is eligible for an exemption. If eligible, developers will need to ensure that their eligibility is sufficiently documented and that the required annual declaration is completed and filed accordingly.

What Goes Into a Property Assessment

The B.C. Assessment Act requires that both physical condition and permitted use of a property are determined as of October 31, after the valuation date. Property owners need to verify the property is only being assessed for what is on the property and is classified according to the use of the property as of October 31.

This includes things such as verifying square footage of the land and any improvements, to more complex factors such as condition and use. If your property was under construction or going through renovations, the assessment needs to be reviewed to ensure you are only being assessed for the progress to date as of October 31..  One situation where this could result in an overassessment is if the assessor overestimates the stage of completion for partially finished buildings.

Another common situation is for a property that has had damage, such as a leaking roof which requires repairs. To avoid an inaccurate assessment, you should review these issues and ensure your assessed value reflects all negative factors that would impact the market value of the property.

Market Value

Reviewing the market value of the property is another key step to ensure the assessed value is reflective of the market value of comparable properties in similar areas.

BC Assessment assesses property values as of a July 1 valuation date. The assessment notice you will be receiving in January 2019 will be based on sales of similar properties that occurred around July 1, 2018. Work with your advisor to review market transactions throughout the year and determine when a property is assessed above market value. In these cases, a property tax specialist can present market evidence to the assessor and negotiate a reduction in value.

Equity

The primary purpose of an assessed value is to determine a property owner’s fair share of taxes. An independent equity review is used to ensure you are assessed fairly. Similar properties with similar characteristics should be assessed similarly. For property owners, this means they could see an assessment value that reflects the market value of their property but still be paying more than their fair share of taxes.

By reviewing the assessed value of a property and conducting an analysis of the assessed value of other comparable properties, you can ensure your property is equitably assessed. And that you are not paying more taxes than other comparable properties.

What’s Ahead

Keep an eye out for two key notices over the next few weeks. The first, an early notification letter at the end of December, is directed only to owners of properties that will see: a significantly higher increase in assessed value than typical for their property type; a change in classification, or the removal of an exemption. All these changes typically result in higher property tax liability.

Then, in early January 2019 all property owners will receive their annual property assessment notice, with a deadline of January 31, 2019 to file an appeal. That leaves you less than a month to prepare and submit a formal appeal if you disagree with the assessment.

Property tax assessment reviews can be quite complex. To ensure you get the most accurate assessment, confer with a property tax specialist. They will conduct an in-depth review for each property at multiple times throughout the year to ensure you are being assessed fairly.

Contact Inder Nijjar, Manager, Property Tax Services, at 604.536.7614 or [email protected]