With local councils working on budgets and BC Assessment’s letters about home values arriving in mailboxes, it may be time for a refresher on exactly how and why property taxes go up (or, on rare occasion, down).
The property values for a single family home in Maple Ridge went up a truly ludicrous 37 per cent in the last year, taking the average price of a detached home past $1 million for the first time.
In Pitt Meadows, the assessment rose 34 per cent, also passing a million bucks.
Maple Ridge saw a one-year increase in assessed value of just over $300,000, Pitt Meadows was a bit under that.
Similar increases, if not quite as extreme, were seen for condos and townhouses.
As usual when there’s been a steep increase in home prices, some folks who spotted that news on social media immediately went into panic mode, fearing their property taxes will go up by more than a third.
They won’t. That is not how property taxes are calculated.
Before taxes are calculated, municipal accountants adjust for the upwards and downwards swings in the average price of each type of home – house, condo, and townhouse.
All else being equal, if the municipal government decides on a two, three, or four per cent tax increase, you should pay two, three, or four per cent more than you did last year, but definitely not 34 to 37 per cent more.
There are a couple of important exceptions to this rule, however.
The most important thing to check on your BC Assessment notification is whether your home went up by more or less than the average for that type of dwelling in your town.
It’s possible your home went up by just 25 per cent or 30 per cent in value last year. If so, congratulations, you will probably pay slightly less tax than you did in 2021, even if the municipal council sees the need to increase rates a bit.
On the other hand, if your home went up in value by 45 or 50 per cent, then you could see a higher tax bill next year. It is possible to appeal your assessment if you think it is wildly off, but you must do so by Jan. 31.
In general, it’s your civic politicians who decide how much more property tax you’ll pay, not the swings of the real estate market.
There are also some long-term issues to worry about.
When municipal governments need to build anything, from a slightly wider road to a new civic pool, from an elementary school to a works yard to store trucks and equipment, they also need to buy land.
The big increase in property values mostly comes down to land values shooting through the roof. And whether they buy it on the open market or use the (rare) expediency of eminent domain, a municipal government has to pay what the property is worth – and assessment is a key indicator of that.
So over the next few years, your taxes may go up, not because a wild swing in property values drives them up directly, but because your local city hall has had to cough up more than 30 per cent more this year compared to last year for every scrap of land they need.
We may not pay directly for increased property values, but they do have a cost.