Happy New Year often means happy new taxes and fees we all have to pay. Along with that comes the tax assessment notice from BC Assessment. Many homeowners in BC are seeing significant increases in the assessed value of their properties and getting worried about what that could mean at tax time.
But wait….tax assessments are just that. It’s the estimated market value of your property as of July 1, 2016 with an adjustment for physical condition as of October 31, 2016. Will this result in a higher tax bill?
An increase in property value for you will likely mean an increase in property values for all your neighbours as well. When everyone’s properties go up the same average amount, it doesn’t mean you will be paying higher taxes necessarily.
The assessed value of your home goes into a formula with the Mill Rate (based on your local municipal government revenue requirements) to determine the taxes payable. If all things stayed the same with the municipal budget from last year to this year, the mill rate would likely go down. You see, mill rates work almost opposite to assessed value. When the aggregated increased assessed values go into mill rate formula, the mill rate goes down.
Here’s a simplified example:
2016 Tax Year
Assessed Value: $350,000
Mill Rate: 8
Property Taxes: $2800
($350,000 x 8)/1000 = $2800
2017 Tax Year
Assessed Value: $400,000
Mill Rate: 7
Property Taxes: $2800
($400,000 x 7)/1000 = $2800
The above example shows a 14.3% increase in the assessed value with no change to the taxes payable. To check back into reality though, it’s likely that your municipal government's revenue requirements will go up this year and that would push the mill rate up slightly. Also, there are school taxes and other municipal levies that make up your final tax amount and the Homeowners Rebate, if it applies to you.
So for now, you have a couple of options. If you feel your assessed value is fair, then relax until the tax bill comes in. If you feel it’s incorrect however, your option is to file a complaint with BC Assessment. That needs to be filed by January 31, 2017. In any event, it’s good to save for your tax bill to ease the shock at tax time.
For more information, contact your Royal LePage agent today. And remember “Helping you is what we do”.