Property values throughout Nanaimo have risen sharply this year - as we are quickly approaching tax assessment notice time it's a good time to shed some light on how tax assessed values compare to taxes.
On average we will likely be seeing around a 20% increase in property values in Nanaimo - does that mean that your City of Nanaimo taxes will be going up by 20%? The quick answer is no. Will your taxes be higher in 2017 than they were in 2016? The quick answer on this one ... maybe ... but only marginally. Read on to find out why.
How Property Assessment is Set
Every year BC Assessment is tasked with valuing all the properties in BC - residential, commercial, recreational and even municipal land. Last year they assessed 1,996,112 properties across British Columbia with a total value of $1.3 Trillion (yes that's with a T). Obviously they can't visit every property every year so they use computer models, municipal permit data, land title data and real estate market data to track trends in changing value. Your home is compared to similar homes that have sold in your area taking into consideration any improvements made. BC Assessment has information about your home - you can find out what they know about it by looking up your address at EValueBC.BCAssessment.ca (you can look up anyone's home on this service as well). The valuation that you will receive in January 2017 will be what BC Assessment determined your home was worth in June of 2016 (with exception to homes under construction - the dates are slightly different for these homes).
Here's a video describing what they do:
So once the value of your home is set does that determine what your City of Nanaimo (or the municipality that you are in) taxes will be for 2017? Not Exactly.
How are Property Tax Values Set?
Once BC Assessment has done their job in valuing all the properties in BC (and they have made it through any appeals that are made) each municipality determines how much money they need to run the city services for the next year and subtract any known revenues (grants, permits, etc). The money that remains is then needed to be raised in property taxes. This amount is divided by the total value of all the property in the municipality and multiplied by 1000 which is results in the tax rate. Once this rate (called the mil rate) is determined you can now figure out what your property tax will be. This number is determined by mid-May each year.
If you your municipality is expecting higher costs of operating or taking on a large project funded by the city tax payers then your taxes will go up. If the costs to operate were the same as last year then taxes "should" be the same as last year - regardless of an increase (or decrease) in property values.
Does a Higher Property Value mean a Higher Tax Bill?
In the majority of cases No, an increase in property value will not mean a higher property tax bill. The exception to the rule is if your property rises in value higher than the majority of properties in your municipality. How can this happen? If you work to improve your property with work that increases it's value - i.e. significant renovation or expansion, brand new expensive pool, adding a carriage house or suite - if all the homes around you went up 20% in value and yours went up 30% in value your property taxes will be affected as you improved the value of your home.
When to Appeal your Property Assessment?
Following along with the discussion on the paragraph above - if the value of your home has gone up significantly more than what your municipality has gone up on average AND you haven't done any thing to significantly improve the value of your home it could be worth your while to call BC Assessment once you get your assessment and see why your assessment is higher than the norm. All homes in Nanaimo, for example, should be seeing around a 20% increase in value over last years assessment - if your assessment is considerably higher than that give them a call at 1-866-825-8322. Assessments should be arriving early January.
Do you have questions about this or what your property value may be? Are you thinking it may be time to sell and needing a current market valuation? We will be happy to help - drop us an email at email@example.com or give us a call at 250-760-2231 and we'll be happy to answer any questions you have.
The Dan Morris Real Estate Team
Royal LePage Nanaimo Realty