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Tax Assessments and Rapid Fluctuations

Posted by on Monday, January 9th, 2012 in Victoria Real Estate News

With the rapid fluctuations in the real estate market of late, house prices can quickly go up or down in value, resulting in annual property assesment values that appear significantlyout of line with the current market. Also, with the time lag delays in receiving the actual assessments verse the time it takes the market to change, it can be hard for the tax assessors to stay in tune with the current markets, and by the time the assessments reach the general public, we have experienced a market correction one way of another, resulting in tax assessments that are ripe for public debate and outcry.

I am constantly asked by friends, family and clients – why did my assessment go up when prices have come down? Why did my assessment go down, but my neighbours went way up? How will this change affect my property taxes? Historically, assessments have been used not as a gauge for actual value, but for an average price to set your municipal or city property taxes to. Therefore, the assessed number should not be compared to actual real estate sale prices.  Nor should any percentage of average assessments be used to try and guess true market value. Every city will have a street or a block that is much higher in value to the one right beside it. Similarly, a neighbours house may be valued significantly different if the neighbourhood has a lot of homes that were built in different eras. Victoria, for instance, has a wide range of homes and styles dating back to the late 1800’s and early 1900’s, with a high number built around 1912, 1920-1930, 1945-65, and modern booms from the 1970’s until today. All of these house styles reflect slightly different assessed values, which can be quite frustrating for the home owner to analyze. On top of all of this, if a neighbour has completed a basement without a permit, then this space may not be calculated by the assessor, so the assessed value for a home like this may be significantly lower than it should be. 

The main area of concern for the home owner is the effect of assessments in the pocket book at the end of the day. Of course, higher assessments mean higher annual property taxes. This is a catch 22. If you are planning on selling your home, then a higher assessment will help you justify your list price, and may discourage buyers from trying to low ball your house, especially in a slow market like we are experiencing at this particular time. However, if you are not planning on moving, then the higher assessment can mean significantly higher taxes.

One thing to note, if the overall assessment averages increase, but the municipality or city is determined to keep taxes from increasing, then the municipality or city will adjust their mill rate, which is the number that is multiplied by your assessment to determine your annual property tax amount. This means that property taxes will not change much if your annual assessment change is within the regional average increase or decrease. Therefore, the only way that your taxes will be significantly altered is if your percentage change in your assessment is significantly out of the range of the average. For instance, if the average increase is 5%, and yours goes up 10%, you may have grounds to appeal your assessment.

The government does allow a home owner to appeal their assessments, if they feel that the assessed amount is significantly out of line with the average assessment percentage change. Therefore, at this time of the year, when all of the new assessments are arriving in the mail, before you decide whether to dispute your assessment, it might be worth looking at the pros and cons of a high assessment verse a low assessment if you are planning on moving during the current tax year.  Depending on your situation, making an appeal might be something worth considering. The initial appeal must be made to the property assessment review panel by January 31, 2012, and the final appeal deadline is April 30, 2012. Details can be found here: If you have any comments, questions or concerns about your property assessment, feel free to contact me anytime.

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