It happens every year.
Homeowners receive property assessments from B.C. Assessment based on the property’s market value in July of the previous year.
Each year, city hall staffers get calls from homeowners who mistakenly assume that if their assessed value has increased so will their taxes. It’s the same dynamic that sees a flood of assessment appeals arise almost immediately after assessments are delivered.
But there are a few things that property owners need to understand about the system.
First, there’s no sense in calling city hall about your assessment. It was prepared by B.C. Assessment, a crown corporation with no connection to your municipality.
Second, just because your assessment has gone up, it does not mean that your taxes will increase.
That calculation is based on the municipal budget.
Every municipality annually sets out their budget and then goes about determining the mill rate that will be applied to property owners in their jurisdiction.
The mill rate is the percentage of tax that will be applied to every thousand dollars of property value to generate the money the municipality needs to operate. Municipalities multiply the assessed value by that mill rate and divide by 1,000 to determine the tax. It can be more complicated as your property tax rate bylaw may set out a series of additional mill rates for items like the Vancouver Island Regional Library contribution that are then added onto the general municipal mill rate.
Clear as mud?
Well, think of it this way. It’s the mill rate that will play a much larger role in determining the tax one pays than the assessed value of a property.
That’s because the municipality calculates the mill rate based on their budget requirements and will adjust that rate so that the money collected reflects those budget needs.
If the assessments rise across the board, the mill rate will generally drop and property taxes will only rise in proportion to the real increases in the spending needs of the municipality.
Quite simply, before you rush to appeal an assessment, determine if your property’s assessed value has, without reason, increased by a higher percentage than your neighbours.
If it hasn’t, take a deep breath and realize that your home’s market value may just have gone up while your taxes will likely stay the same.