The tax assessments are out and they are, as the BC Assessment Office warned in the news last month, higher than what homes will sell for (market value) in most cases. Receiving a high assessed value leads some property owners to believe that their homes are worth more than they could sell for in today's market. I have had some clients calling and they cannot believe their homes would sell at the assessed prices...and they are likely correct. So far we are seeing some assessments coming in too low (as usual) but many are too high. This causes a problem as owners often believe that their home's value, should they sell, will be higher than their assessed value...but that is not always the case. When markets have gone up in the past, we have also seen this problem. Given the current downward trending prices, the gap between assessed value and what a home could likely sell for is expected to increase throughout this year.
What do you need to know about your assessment?
1. The purpose of your tax assessment is NOT to determine market value
Tax assessors are NOT appraisers. Nor are they realtors...and they work with a lot less information.
Tax assessors do not set foot in the home they are valuing nor in the comparable homes that have sold in the area. The tax assessor's valuation is a paper/online exercise for the most part.
Appraisers look at an individual home and determine its value based on the comparables. They usually go inside the home they are valuing. Often they have not been inside the comparable homes but at least they have the information about the particular home they are valuing.
Realtors see the home they are valuing AND most of the comparables...and they are in the market watching and experiencing what people are doing in terms of bidding wars and pushing prices up. So their market valuations should be the most accurate.
2. Tax Assessments don't look at the market today.
Tax assessors are looking at a snapshot for an approximate value as of July 1 the PRIOR YEAR. The market can change a lot in 6 months. Also in arriving at a value for July 1st each year, the assessor will look at sales that occurred in months preceding July 1st. This means that in a falling market like we have seen this year, the sale prices the assessed value will be based on could be very outdated. This is why tax assessments have no real relationship with market value.
3. Tax Assessors are not looking at your individual property.
Tax Assessors have hundreds of thousands of homes to value. In 2022 they did over a million assessments in BC. To review each home would take far too much time. Instead, the assessors use
averages, look at what the market is doing overall, look at what is happening in the area where the homes they are assessing are located, etc. The value they provide is only used to determine the property tax you will pay for that year.
averages, look at what the market is doing overall, look at what is happening in the area where the homes they are assessing are located, etc. The value they provide is only used to determine the property tax you will pay for that year.
4. The percentage your assessed value has increased by does not determine the percentage by which your property tax will increase.
5. If you would like to appeal your assessment, you need to file the appeal before January 31, 2022. After this date you cannot appeal your assessment.
6. Assessed values are apples; market values are mangoes.
If you would like to know the MARKET VALUE of your home, or if you have questions about your tax assessment or anything else real estate related, I am more than happy to discuss.
If you would like to know the MARKET VALUE of your home, or if you have questions about your tax assessment or anything else real estate related, I am more than happy to discuss.
Happy New Year and all the best in 2023!