You go to your mailbox and find the City Assessment Notice, eagerly rip open the envelope and quickly scan to see your property value. WHAT?! This can’t be true! How can my property increase by that much in ONE YEAR!
This has been a common theme of late and if you own a condo, the exact opposite can be said. How can my property decrease by that much in one year! Well have no fear, the City Assessed Value doesn’t mean what you think it does! In fact, I’ve seen property tax assessments off as much as 30% in either direction!
The City Assessment Process
Calgary, Airdrie, Okotoks, Chestermere – they all do it the same! The City uses a method called ‘Mass Appraisal’ to calculate market value for all residential properties to determine a value of your property as of July 1, 2017! Yes, 6 months ago! Within this method, City employees look at a huge amount of data about your home including:
· Current Market trends – sales / inventory / economics
· Specific property location (including proximity to green spaces, community services, access, views, traffic, area development, etc)
· Total finished floor area of a home
· lot size
· basement development
· quality of upgrades
· condition of home
· repairs needed
· age of building
· existence and type of garage
· legal vs illegal suites
· quality of renovations / repairs
· warranties if any etc.
Where do they get all this data? When your home is built, the builders provide base information about your property. Size, upgrades, development, etc. As your property ages and sells to new owners, the City gets that information too! That means that through the buy/sell process, the City takes the newly update information from your home! So how can the assessment be wrong?
Property Assessment vs. Market Value
Here’s the thing – the City hasn’t been in your home! They don’t actually know what upgrades you have done, if you’ve finished the basement (unless you got a permit and I sure hope you did!), what you may have changed or not changed. Like Goldilocks, I have seen assessments be too high, too low or just right. The City isn’t out to determine an exact market value of your home – they’re out to collect taxes! While the method of assessment they use is as accurate as they can make it, they are still take community market averages to estimate the value! Yes, your assessment is an estimate! I don’t even look at the tax assessment when doing a property evaluation!
City Assessment: Used for taxation purposes only! A general way to determine value on a wide scale to tax a large area the same time.
Real Estate Market Value: The price at which your home would sell for on the open market. This method involves a physical inspection and real market comparable data for the last 90 days. Luckily you all know someone who does this!
My Assessment is Too High!
This is common, especially in older neighborhoods where slight modifications can really add up or if you’ve recently completed an addition, garage, basement development etc.! If you feel your assessment is more than 5% over current value (as a small increase may not actually change your taxes), here’s what you do!
1. Ask me for a property evaluation to make sure
2. Call the City at (403)268-2888 to start the process
3. Be prepared to back up your claim!
4. REQUESTS MUST BE MADE BEFORE MARCH 12, 2018!
Please note that a complaint fee is applied and you may be required to take a day off to stand in front of the assessment committee. All of this costs time and money and may not change what you actually pay in taxes!
My Assessment is Too Low!
Lucky you! Call me for reassurance, but don’t freak out that your property sale price has plummeted. Take the low assessment and walk away!
My Assessment Went Down but my Taxes Went Up!
That can happen! Remember, your property is being compared to those on your street, in your neighbourhood, community and City wide. If there has been an economic recession, assessment values may go down but guess what? The City still needs the same or more in taxes! So what happens? The mill rate they use to calculate them goes up! So even if your property taxes go down, you may end up paying more – but so will everyone else!
The same happens when the City is doing well! Property valuations may go way up but the mill rate is lowered as the amount in taxes the City needs to collect doesn’t correlate with the real estate market!
Have any questions or want a full evaluation just to ‘make sure’ your assessment is right? Just ask! It doesn’t take me too long (so don’t worry about wasting my time!!). I’ve helped you buy your home and I’m going to help you live in it!