My BC Property Assessment Went Up! What This Actually Means For Taxpayers
Property owners in British Columbia are getting an annual letter in the mail - their official property assessment from BC Assessment (BCA) is in. Some are noticing huge jumps in the value of their house and are left wondering: Am I going to have to pay a massive property tax bill compared to last year just because my house is worth more now?
To understand how property taxes relate to the annual assessment and what this means for you, read on.
How Are BC Property Assessments Figured Out?
Each year in January, a property assessment is mailed out to property owners in British Columbia, based on the property’s market value from July 1st of the previous year. The assessment estimates the value of the land and the buildings on the property combined. There are several factors that assessment workers follow when coming up with the magic number. Usually, people are most familiar with property assessments because it comes with homeownership, but it applies to all property types.
Location of Home
Size of Home
Size of Lot (Land)
Age of Home
Various features that affect the overall value (e.g., pools, fences, nearby parks, etc.)
Sale prices of homes nearby
A group of provincial workers from BC Assessment (BCA) check your home’s value by looking at a collection of criteria on July 1st, then they mail out an official report that you receive in the following January.
How is Property Tax Calculated in BC?
The amount of property tax you pay is determined by:
The taxable assessed value of the property (the notice from BC Assessment)
The Property Tax Rate - calculated by the city depending on the type of property and budgeting needs.
The tax rate applies to each $1,000 piece of the assessed value. So, if your home is worth $500,000, you divide by 1,000 to get 500. You take this 500 and multiply it by the property tax rate for the type of property you own. The result is the amount of property tax you are required to pay.
Each municipality has a different tax rate depending on the needs of the town or city. Two homes with the same assessment value can have different tax amounts to pay if they are in different cities. The type of property you have will also decide what tax rate you pay, as there are nine types of properties such as residential, utilities, supportive housing, light industry, and so on.
Due to the different property tax rates, a residential home valued at $350,000 will have a different tax bill than a light industry property that was also assessed at $350,000. Homes in rural areas with access to some city resources may have a different tax rate based on the needs of that jurisdiction.
What Determines the Property Tax Rate (Mill Rate)?
One of the tasks the mayor and council have to do is plan the budget based on needed services, inflation, and sources of income. Existing revenues, grants, and savings are used as sources of income first, and then what is left over gets paid by taxes. Property taxes are a consistent source of income year to year, so they are used to help pay for the remaining part of the expenses. Once the city figures out how much money they will need from taxes, they divide that amount among the nine property classes then set property tax rates (also called Mill Rates) for each property type.
It is important to note that the property tax rates are determined separately from the assessment values. Usually, the assessments are conducted after the tax rates have been approved and published by the City Council.
My Property Assessment is Larger than Last Year - Are My Taxes Going Up?
The answer to this question depends on the property tax rate determined by the municipality and how your assessment’s change compares to the average assessment change in your municipality.
If your home’s assessment increased, but it was similar to the overall average increase in your community, then you might not see much of a change on your tax bill. If your home’s assessment increased more than the average, then you will likely have a larger tax bill. However, if your assessment increased but fell short of the average for the rest of the municipality, your taxes are likely to decrease.
It may seem strange that an increase in a home’s assessment might result in a lower tax bill, but the important factor is how does the change in assessment compare with the average change in the community? It is not based on how much it changed for you personally year to year.
Real Life Property Tax Examples
Let’s say you own a home that was assessed at $450,000 last year, but now your assessment has come in the mail, and it has now increased to $540,000 - a 20% raise! It seems high, so you start doing some research and learn that the average assessment for the community increased by 30%. It looks like more people have higher assessments than last year, but what does this actually mean?
Are your taxes going to skyrocket because your assessment is much higher this year?
Actually, they will probably go down! Although your home increased in value by 20%, it is still lower than the community average of 30%. You will still have to pay taxes, but they will likely be decreased compared to the previous year. Your increase was less than the average, so you will likely have a lower tax bill.
Another example is that the same $450,000 home jumped in its assessment to $630,000 instead - a 40% increase. The average assessment increased by 30% in your community, making your assessment larger than the average. In this situation, you will likely need to pay more taxes for having an assessed value higher than the average.
Many people get shocked by the large differences between assessed property values from year to year and automatically assume a large tax bill is right around the corner. It is important to look at the property’s new assessed value and how it compares to the changed average value in the community. Also, the tax rate determined by the municipality is another key to understanding how impactful these changes actually are. The average change in assessments for the municipality is the benchmark for you to compare your own assessment to and if it falls above or below. If your difference is higher than the average, you will probably pay more. If it is the same or below the average, your bill will likely stay the same or decrease.
Other Reasons Property Taxes Change
A change in your tax bill can happen for other reasons, too. If you wonder why your property taxes have gone up, it might be due to something else that has changed compared to earlier years.
Some other factors that can change property taxes:
- The property’s classification has changed (e.g., farmland to residential)
- A change in local services (e.g., more funding required for better policing)
- The property is no longer considered in the Agricultural Land Reserve (ALR), meaning the ALR exemption for reduced school taxes and local services has been removed.
What is the BC Home Owner Grant Program? Help With Finances
The Home Owner Grant Program is a yearly grant provided by the BC government to help permanent residents pay their house taxes. If paying your property taxes is a struggle, this program is worth looking into. It won’t cover the entire amount, but depending on your circumstances, it can take a decent chunk out of it and lighten the financial load on your wallet. A major change that started in 2021 is that most municipalities no longer process the application - it has to be done online by the homeowner ahead of time. Once the assessment arrives in your mailbox, you can fill out an application online.
How Much Time Do I Have to Pay?
The official due date to pay your taxes is July 2nd. Sometime in the spring, the tax notice will be mailed out to property owners. If you disagree with your assessment, the appealing process is now open but only for a short time.
Some important milestone dates:
- Beginning of January: BCA mails out assessments to property owners.
- January 31: Deadline to request a formal review/appeal of your property.
- May 31: Tax notices are mailed out.
- July 2: Deadline to pay taxes, apply for grants, defer taxes, and apply for the Farm Extension Program if applicable.
The Bottom Line
An increase in property assessment doesn't mean an equally large increase in property taxes. The amount of taxes paid to the city is determined by the tax rate set by the City Council and the overall average assessed value of similar properties in the same year. It is possible to have an increase in your home’s assessment and come out with a smaller tax bill than previous years, as long as the average increase was larger than what happened to you.