Everyone knows there are only two certainties in life: Death and taxes. Most landlords, tenants, and property owners want to know if they are paying too much tax and what to do about it.
Overview
Following is a brief overview of the process to provide an understanding of how the property tax system works.
The total amount of property tax you pay is the tax rate times the assessed value. A tax rate is created as follows.
Total municipal budget x 1000 = Tax rate
Total assessed value
Four fundamentals of assessment that may need to be reviewed.
- Property Valuation (Assessed or actual value)
- Classification
- Exemption
- Equity
Property Valuation
To create the assessment roll each year, an assessor determines the value of your property as at July 1, in the previous year. That value is actually based upon the physical condition of your property on October 31st of that year.
BC Assessment (BCA) uses “market value” to determine your assessment. That generally is the price the property would sell for, unencumbered and with no leases in place.
BCA traditionally considers three approaches to determine a property’s value: The market or comparable sales approach, the income approach, and the cost approach. A question is are all the components correct in their valuation?
Classification
Nine classes are defined in BC Regulation 438/81. The most common classes are
- the Residential class (01), which has the lowest tax rate;
- the Industrial class (05);
- the Commercial class (06); and
- the Recreational Use and Non-profit Class (08) that covers gardens, parks, and non-profit organizations.
Class 08 generally has a higher rate than Residential, but lower than Commercial (06). That is why so many vacant commercial sites are transformed into community gardens or parks.
Properties with actual or potential mixed-use classifications are complicated because the uses can be split. Thus, the tax rate can be at one level for a certain percentage of the value and different for the rest.
For a Residential/Commercial property, the goal is to have the highest possible percentage classified as Residential.
Exemption
The British Columbia real property tax system exempts certain types of taxpayers from real property taxes. Most of the exempting provisions are contained in the Community Charter, the Local Government Act, theVancouver Charter, and the Taxation (Rural Area) Act.
In addition, specific exemptions can be found in a variety of other provincial statutes such as the School Act, the College and Institute Act, the University Act and others.
Equity
The assessed value is the lesser of market value or the value comparable to other similar properties in the same taxing jurisdiction—for example, the City of Richmond. Therefore, if your property is assessed at market value, but other comparable properties in your jurisdiction are assessed at 90 percent of market value, your property may be incorrectly assessed. Checking equity can be done through the BCA website..
Relevant Dates
Acts refer to certain relevant dates:
- Value – July 1st
- State and condition – October 31st
- Legal title – November 30th
- School Tax – October 31st & November 30th
- Classification – October 31st
- Speculation Tax – December 31st
- Empty Homes Tax – December 31st
If you intend to rely on these dates, you should check the Act to make sure these dates are applicable to your circumstances and up to date.
Where to Locate Assessments
Municipal websites
Municipal GIS maps
Note: In January, some municipal sites may still show the previous year’s assessments. It is important to confirm the year to which the values relate.
Helpful Websites
Queen’s Printer for Acts: www.qp.gov.bc.ca
Assessment Appeal Board: www.assessmentappeal.bc.ca
BC Assessment: www.bcassessment.ca
Canadian Property Tax Association: www.cpta.org
Austin Real Estate Consultants: www.austinrealestateconsultants.ca