Budgeting for your 2014 Property Taxes
A Guide for Owners and Property Managers
Several factors will affect property taxes in 2014.
- Removal of school tax rebate for light industrial class (05).
- A disproportionate increase or decrease in assessed values.
- Land averaging in Vancouver.
- Budget increases of municipalities and government agencies.
- Change of government or council policy on tax allocation.
Property Taxes are calculated as follows:
Assessed Value / 1000 x Mill Rate
The total mill rate is made up of separate mill rates set by varying authorities:
(Richmond Class 06, Business, used as an example):
Each authority determines their budget and what proportion of that budget each of the 9 classes will absorb. The mill rate is calculated as follows:
Budget Allocation Class 06 x 1000 / Total Assessed Value of Class 06 = Mill Rate
Generally, as assessed values increase year to year, the mill rates in the second year will fall and in a perfect world, only a small tax increase occurs each year.
School Tax Changes for Industrial Property
Properties with 05 classification will receive an estimated increase of 7-15%, dependent upon the municipality (see attached chart). Properties with mixed class will vary proportionately. A rough guide for 2014 would be to take 2013 assessed values times the adjusted mill rate prior to other adjustments. The higher the mill rate, the lesser the % of change. The adjusted mill rate is calculated by adding all mill rates for each taxing jurisdiction plus school tax at the class 06 rate of 6.2.
Industrial property in Richmond with Mixed Use (Manufacturing (05) and Warehouse (06))
|05 Tax||$ 36,629||$ 41,329|
|06 Tax||$ 23,466||$ 23,466|
|Total Tax||$ 60,095||$ 64,795|
Land Averaging in Vancouver
If the land increased in 2013 and/or could potentially increase in 2014, there will likely be a tax increase for 2014. The assessed land value in Vancouver is the average of the last three years. The building value is then added.
|Average Assessed Land Value||$1,500,000||$1,900,000|
|Building value||$ 50,000||$ 50,000|
Increase/Decrease in Assessed Value
If your assessments change in the same proportion to the % change of total assessments in your particular class (residential, commercial), then, your taxes will remain the same. However, a disproportionate change will result in taxes changing. For example, if the change in assessed value on your property was 16% upwards from last year and the total overall assessments of all commercial properties increased by 10%, your taxes should go up by approximately 6%. This information is not available until January; however, BCA have stated generally that the following increases can be anticipated:
|Retail:||0 – 5 %|
|General||0 – 10 %|
|Vancouver||0 – 20 %|
|Industrial Property||5 – 10 %|
|Office Property||5 – 10 %|
This is of concern if there has been some basic change to the property, such as size, physical condition or rental rates, or if the property sold at a price that is significantly
different from the previous year’s assessment. The new assessed values should be estimated and new taxes calculated accordingly.
Increase in Government/Municipalities Budgets
Total tax needs have generally increased by some 2-5%. A check of previous tax bills will give a guide to the amount of annual increase, provided the assessed value changes were consistent with the market. In most municipalities, the mill rate has been falling, but taxes increasing. BC Transit mill rates did not fall even though values rose.
Change in Tax Allocation
The % share of tax revenue for each class may vary. A decrease in that % for say, 06 commercial class, will result in a fall in mill rate for that class. If a taxing authority changes its splits, then any adjustments previously suggested will vary.
BCA value properties on a “mass” basis. Specific idiosyncrasies of each property may or may not be recognized. A review of the assessed values will determine whether BCA has properly identified any negative factors in a property.
Austin Real Estate Consultants specializes in the review and appeal of property assessments, rental arbitrations and appraisals. Peter Austin formed the company in 2003 after having been a partner at Burgess Austin Cawley for 25 years, which he had founded in 1978 with Mr. Burgess.
Mr. Austin has been involved in the appeal process for over 35 years, and was the Chair of the BC Chapter of the Canadian Property Tax Association for 5 years up to 2011 and the Past President of the National Association. Consequently, Mr. Austin has developed an in-depth knowledge of the system and the associated legal cases that affect how properties are assessed, which number over 500. Mr. Austin has saved clients millions of dollars in taxes over the years.
Please call if you have any questions or if you would like us to estimate your taxes for 2014.
- NAIOP Industrial Panel
- Classification of Mixed Use Sites - Part 2
- Opportunities for Brokers
- Valuation of Properties Under Construction
- Is Assessed Value Equal to Market Value?
- Civil Resolution Tribunal Update - October 2014
- Assessment Appeal Board Changes Classification for Mixed Use Development Sites
- Strata Civil Resolution Tribunal Update
- Reviewing Appraisals - Download
- Resolving a Rental Dispute
- How are School Taxes Calculated? | doc