More on Property Assessments: How to Calculate Tax Payable
Here is an article from the BC Assessment Authority which answers a question a lot of my clients have been asking about the tax payable on their homes this year.
The Property Tax Equation
BC Assessment determines the assessed value of your property based on a valuation date of July 1st of each year. Your assessment notice is mailed to you by BC Assessment in January and contains your assessed value, property classification, and tax exemption* status. In early spring, your taxing authority sets its property tax rates for each of the nine property classes and applies the applicable rate, i.e. residential, to your property’s assessed value, less the value of any applicable tax exemptions. The taxing authority mails you a property tax notice which details the property taxes payable by you to them.
A tax exemption is a release from paying all, or a portion of property tax levied by a taxing authority, i.e. a municipality, First Nation, or the surveyor of taxes in rural areas.
How are assessed values, property tax rates, and property taxes related and what influences your property taxes?
ASSESSED VALUE X PROPERTY TAX RATE = PROPERTY TAXES
* Unless your taxing authority has enacted an alternative municipal tax collection structure under Section 235 of the Community Charter.
Each January, BC Assessment mails property assessment notices to the owners of 2+ million properties in the province. The notice contains your assessed value, which is the estimated market value of your property as of July 1st of the previous year, the property classification, and tax exemption status.
The assessed value, property classification, and tax exemption status are important factors in determining how much property tax you pay, and form the first piece of the tax equation formula.
Please contact your taxing authority, or visit their website, to learn more about how they calculate property tax rates in your jurisdiction.
Property Tax Rate
Your taxing authority has an annual budget to fund important services used every day in your community. Each year, new tax rates must be set before May 15th in order to raise enough revenue from property taxes to cover their annual budget. There is a different tax rate for each of the nine property classes.
Property tax rates are independently determined by your taxing authority and are applied to each $1,000 of taxable assessed value. BC Assessment functions independently of taxing authorities and has no role in setting property tax rates.
The property tax rate is the second piece of the formula that determines how much property tax you pay.
To calculate your property taxes, multiply the taxable assessed value of your property by the property tax rate for your property class. Property taxes are collected by your local taxing authority, i.e. municipality, First Nation, or the surveyor of taxes in rural areas, and are used by the local taxing authority and distributed to the provincial government to help pay for things like schools, hospitals, and to other taxing agencies like transit authorities.
If your property is located within the City of Vancouver, your property taxes may be affected by Land Averaging. For more information, visit the City of Vancouver website.
If your residential property is valued at $3 million or more, additional school tax may be levied against it. For more information on additional school tax, visit the BC Government's school tax website.
The information on this page is for information purposes only. For specific questions about property taxes, please consult your municipality or taxing authority.
Example: Say your property is assessed at $500,000 as of July 1st of the previous year. Since the property tax rate applies to each $1,000 of taxable assessed value, you must divide the assessed value of your property by $1,000. Next, multiply that number by the property tax rate for your property class to determine your property taxes.
$500,000 / $1000 = $500 X 4.57500 = $2,287.50
You will see that it is not possible to calculate the tax payable number without the property tax rate AND that is not set until Spring which is long after the time has passed to appeal your property assessment.
Please let me know if you have any questions on this or other real estate matters.
Patricia Houlihan LL.B, B.A