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A higher assessment doesn't mean more tax

Garry Marr
The Financial Post
October 27, 2012

A little research could save you a lot of money

There’s no question there is something appealing about lowering your taxes.

What if somebody told you a little research would accomplish just that? As annual property tax assessments arrive in the mail, some will no doubt be shocked, and a bit panicked, by the increase in their home’s value — something that may or not equate to a tax hike.

But there is something you can do about it, namely prove your home is not worth as much as the government thinks. It’s a process homeowners can consider in every province, says John Clark, vice-president of valuation and consulting with the Regional Group of Companies.

Everybody has to remember that a hike in assessment value does not automatically mean your taxes are going up. The Municipal Property Assessment Corp. in Ontario said this week assessments in Toronto will be up 5.5% in 2013 and have climbed 22.8% since 2008.

“People think my assessment went up 10%, my taxes will go up 10%,” says Mr. Clark. “If your assessment goes up exactly at the average [of all homes in your city], you see no tax increase. If the average went up 26%, and you only went up 10%, your taxes would go down.”

It is when your house’s value increased at a higher rate than others that you might be facing an increase in your taxes.

Mr. Clark fights assessments all the time and says every province has a mechanism whereby you can lower the assessment on your home and ultimately the amount of property taxes you owe. The cost of appealing an assessment varies from $30 in Ontario to as high as $1,000 in Quebec.

Before you appeal, start by making sure you know what date in time your assessment is based on and then decide whether the value is fair compared to similar homes in your area. Some jurisdictions will provide free information on comparable properties in your area.

One key thing to consider is whether you’ve done some major renovation that the people who do the assessments know nothing about. You might be opening up a can of worms.

“Check the facts that the assessment authority provides in their records and make sure they are correct,” said Mr. Clark. “Sometimes it’s just best to keep your head down.”

But you shouldn’t be too worried an appeal is going to raise your assessment, something that does happen but is rare. “They are not vengeful but you don’t want to go in screaming like a banshee. You always have the right of appeal and on housing it’s much easier than commercial property because the [appeal] fees are lower and there is more data to base your opinion on.”

Joe Regina, municipal relations account manager at MPAC, said his group is in the process of mailing property assessment notices to more than 727,000 area property owners. Homeowners can check the accuracy of the assessment at which allows owners to compare values in their neighbourhood.

"Our values reflect the local real estate market and confirm that most homeowners in the area have seen an increase in the value of their property over the past four years," said Mr.Regina. "Property owners should ask themselves if they could have sold their property for its assessed value on Jan. 1, 2012. If the answer is yes, then their assessment is accurate. If not, we are committed to working with them to get it right."

In some jurisdictions consumers can put off paying their property taxes and have the outstanding amount taken out of whatever equity is left when they eventually sell their home.

The British Columbia Property Tax Deferment Program allows for deferment with an interest rate of 1% provided one spouse is 55 or older (or turning 55 in the year of application) where a home is registered in both names.

You also need to have minimum equity of 25% in your home based on assessed values determined by the province-- a measure included so that the province can ensure the money is actually repaid in case prices collapse.

Applicants must have fire insurance and only Canadian citizens or permanent residents under the Immigration Act who have lived in British Columbia for at least one year can apply.

Posted on Thursday, November 8, 2012 at 10:56AM by Registered CommenterElaine in | CommentsPost a Comment | References1 Reference

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