Development of Sites Under Construction - 2020
The assessed value of sites under construction is based upon their state and condition at October 31st, 2019. BCA are using either a cost approach or a residual value. In the cost approach, BCA determine the land value of the zoned site and add the cost of construction to date, plus DCC costs, CAC costs and consulting fees. The construction costs would be those in place at October 31, 2019. A Quantity Surveyor report assists in calculating the amount.
With the residual approach, BCA estimates the value of the completed project and subtracts costs to complete, to obtain assessed value. The amount BCA deducts should be reviewed, as we have found that not all costs are deducted. If components of the valuation are not at the same date, the conclusion could be wrong. BCA then split land and building costs by deducting building costs. Land value is often much higher than pure land value. This is a mathematical exercise and not worth challenging, unless any municipal tax is based upon land only.
If the % of completion is over 15% (BCA advise), they will use the residual approach.
An analysis of what is meant by 15% should be made by your tax consultant, as this can vary dependent upon what costs are included. The values determined by each method could vary significantly.
Make sure you have photos of any sites where construction has started at October 31, 2019 or at a date as close as possible.