Homeowners in British Columbia this week began receiving their 2018 property assessment notices in the mail. Values of detached properties across Greater Vancouver ranged – from slipping by 5 per cent to climbing 25 per cent – while condos rose 5 to 35 per cent.
But how exactly are individual property assessments calculated?
Brian Smith, deputy assessor at BC Assessment, says some of the most common questions the Crown corporation receives from the public is how an assessment is made, why property values changed and what effect these changes might have on property taxes.
BC Assessment appraisers calculate home values in sections – swaths of land on which homes all have similar characteristics, such as a suburb.
"We say, 'If I have a 5,000-square-foot-house on a 10,000-square-foot lot in Surrey, what are other properties selling for that are similar to this in age, style and location?'" Mr. Smith said. "It's based on the sale of those other properties that determines what that property is worth."
From there, appraisers fine-tune based on factors such as building size, style of the property and renovations. They consider architecture – double doors leading to a main foyer, or a single door leading into a living room? – and finishes: laminate or marble?
For larger renovations, such as the addition of a garage, the assessment authority can review building plans and permits. It also uses street-front photography, 3-D modelling of condominiums, satellite imagery and more detailed oblique imagery captured by a plane flying in a grid pattern, Mr. Smith said.
"We know through our information that if people are spending money on the outside of their home, they are typically spending money on the inside of their home," he said.
If exterior changes are noticed, BC Assessment might send a letter to the property owner inquiring about renovations. The owners can also contact the authority themselves after receiving an assessment notice if there are inaccuracies. For some remote-access properties and all properties for which a building permit was received, appraisers will conduct an on-site inspection, Mr. Smith said.
Condo units within a building can vary even if floor plans are similar or identical.
"The higher up you go, despite it being the exact same [floor plan], you could see a difference in an assessed value," Mr. Smith said. "As well, we know that corner units will sell at a higher value than an interior unit, so we take that into consideration. Sales dictate that higher floors and corner units sell for more, so that factors into your assessment."
A common misconception is that higher property values automatically mean proportionally higher property taxes. In fact, property tax changes hinge not on how much a property's assessed value has changed, but how it has changed relative to the average change for that property class in that municipality.
For example: The average value of residential housing in the city of Vancouver increased 5.6 per cent; a home's property tax would only likely increase if its value increased more than 5.6 per cent. A property whose value was about the same, or lower than 5.6 per cent, would either have no change in property tax, or pay less property tax.
Only between 1 per cent and 2 per cent of homeowners typically appeal their assessments, with the top reasons being the value is too low, too high, or because the property class is incorrect. Last year, 27,903 homeowners – 1.38 per cent – appealed their assessments. The assessment authority does not keep track of how many appeals are successful.
Appraisers assessed more than two million properties this year, with a total real estate value of $1.86-trillion – up 11.9 per cent from last year.