Property Assessments

New Year. New Property Tax Assessments



As REALTORS®, this is the time of year where we traditionally field questions from both our buyers and sellers relating to the disparity between current published tax assessments and the market value of the properties they wish to sell or purchase.

This year we have seen rates rise substantially, which may seen counterintuitive to what we see in the market. 

Residential property values in Metro Vancouver jumped over the past year. Richmond came out as the clear leader at 17.14%. 

Residential market values at a glance:
West Vancouver +13.03%
North Vancouver  +8.05%
Vancouver +12.17%
Burnaby +12.07%
New Westminster +9.11%
Coquitlam +9.12%
Maple Ridge +5.54%
Richmond +17.4%
Surrey +7.58%
Delta +9.2%
Langley City +6.69%
Abbotsford +6.50%

Whistler -2.06%
Victoria 4.04%
Nanaimo 5.58%

Important date?
According to the bcassessment.ca fact sheet, “Appeals in writing must be filed byFebruary 1”.??

Common assumptions and questions?

1. Is my Property Tax Assessment a true reflection of current market value??
It can be helpful to let your clients know that their assessment notice is based on the property’s value as of July 1st. As we all know, a lot can change in the real estate market in 6 months! Remember January 2009? Our real estate market had dropped significantly from July 2008 and assessments did not relate to market value.

2.  Will my assessment rate effect my selling price??
In an active market, with plenty of comparable properties, the assessment rate may be close to the market value, provided the market place has not changed much in the last 6 months.  However we can never rely on this information in determining market value as it can be very inaccurate. Recent additions and renovations may well not have been counted in BC assessment's numbers or recent upgrades or influences in the neighbourhood that bear positively or negatively on value may not have been considered and of course the market may have changed.

Buyers will of course use a lower assessment value to attempt to negotiate the purchase price down, whilst sellers will look to a high assessment value and ask for more money. It is therefore important to educate your client about the relationship between assessment value and market value. REALTORS and appraisers who have visited the home will provide an accurate estimate of market value as they have seen inside the house, viewed the upgrades, understand the local neighbourhood influences and will take into account extraneous factors such as easements, waterfront access, view sight lines, rezoning, upgrades or downgrades to local infrastructure such as new schools, SkyTrain, hospitals, roads and shopping.

Sometimes REALTORS will use the assessment value as a method to determine value if the comparable properties that have sold are similar to the subject property. For instance, three properties in the same neighbourhood have sold and they are comparable to the property being evaluated. Their sold prices are available as are their assessment values. The REALTOR can calculate the percentage difference between the assessment value and the sale price of the three properties to determine the average percentage, then apply this percentage to the assessment value of the subject property to show a seller the potential sale price of their home. There are some obvious risks with this method as the property sales utilized must have occurred recently, within the same neighbourhood and be comparable for this to work and, of course, there needs to be some consistency in the application of the assessment values.  The traditional method of determining market value by comparing similar home sales that have sold recently, in the same marketplace, is normally the best approach!

3. Will the assessment effect my mortgage??
Lenders such as HSBC generally rely on the Comparable and Cost Approach, but are able to lend up to 50% of assessed value without an appraisal.

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BC Assessment’s Online Resources?
BC Assessment’s website contains some great information. I’ve included an excerpt here, plus the following links that you may find helpful for both you and your clients. 

Market Value and Property Assessment

How is market value determined by BCA?
When establishing the market value for a particular property, BC Assessment considers each property's unique characteristics. 

Appraisers may enter a home to conduct property inspections, ensuring that the description and condition of a property is accurately reflected on the Property Assessment Notice. BC Assessment appraisers analyze all real estate sales in their area and develop common units of comparison and corresponding values. They review similarities and differences between properties to arrive at a uniform assessed value for a particular property.

Why are assessments based on market value?
Market value assessment is widely considered to be the fairest system for distributing the property tax burden.

In any tax area, properties of equal value contribute the same tax, while higher-value properties contribute more than those with lower values. Both assessors and taxpayers can readily check assessments by comparing recent sales and assessments of similar properties in the neighbourhood.

Why is there a difference between my property’s value on the Assessment Notice, the bank mortgage appraisal or the real estate assessment?
The real estate market is the single biggest influence on market values. Market forces vary from year to year and from property to property. The market value on an assessment notice may differ from that shown on a bank mortgage appraisal or a real estate appraisal because BC Assessment’s appraisal reflects the value as of July 1 of the previous year, while a private appraisal can be done at any time.

When reviewing the annual property assessment notice, property owners should check that it reasonably estimates what the property would have sold for on July 1 of the preceding year, and that it relates to the value of other properties in the neighbourhood.