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

07/01/2020


Are you paying more than your share of property taxes? That depends on whether your property is accurately assessed. This January the British Columbia Assessment Authority (BC Assessment) will mail out assessments for more than 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.

The 2020 property assessments will be used in conjunction with the municipal tax rates to determine your tax bill. If you have not had your property assessment reviewed, it is important to discuss this with a consultant prior to the January 31, 2020 appeal deadline.

2020 Significant Changes

In early December 2019, BC Assessment mailed out notification letters to owners of properties that experienced value increases significantly higher than the average. Most of these value increases occurred in the industrial market and in many cases will result in significant tax increases.

Development land properties have seen value shifts of approximately  25 percent, depending on location. In addition to the value shifts, speculation and additional school tax can significantly increase the tax liability for development land properties.

High value single family homes experienced the most significant decreases in value across the board in the lower mainland. Entry level homes and condo properties, on the other hand, were more stable. This will result in a further shift in taxes to lower-valued homes.

This year in B.C. will also see changes to the BC Speculation Tax. The tax rate has increased from 0.50 percent to 2.00 percent for land owned before December 31, 2019. Exemption for vacant land ended as of December 31, 2019. New condo property owners and owners subject to new rental restrictions will not qualify for an exemption.

What Goes Into a Property Assessment Review

An effective tax mitigation strategy for each property you own is critical to ensuring you only pay what you need to in tax. A comprehensive review of the value levied on your property for tax purposes is the first step in determining if you are assessed for your fair share of taxes. This review includes the following:

Physical State and Condition

The B.C. Assessment Act requires both physical condition and permitted use of a property are determined as of October 31, after the valuation date. An MNP tax expert will 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, 2019.

This includes things such as verifying physical attributes 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, 2019.

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 received is based on sales of similar properties that occurred around July 1, 2019. The volume of sales was significantly limited in 2019. This means it is critical to work with your advisor to review market transactions and determine if your 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

With the 2020 assessments now available, the deadline to appeal is January 31, 2020. 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]