If you are a homeowner, you no doubt are aware that BC Assessment has just released their assessed values for homes across
Does an increased BCAS value mean that your property taxes are going up? The correct answer is no, not really. BCAS is not a taxation authority and has no control over the property taxes in your municipality. They simply try to establish relative property values. Each year, the municipality you live in decides the total amount of money that they need for the year and then divides that value up among the homes in the municipality. Instead of each property paying the same amount of property tax, a property with a higher BCAS value is assigned relatively higher taxes. The amount of tax assigned to each property is in relation to it’s BCAS value.
So, if your municipality does not increase their total budget for the year then your property taxes will not go up even if BCAS says that every home in the municipality went up 25%. On the other hand, if your municipality increases their budget for the year then each property will pay higher property taxes even if the BCAS values dropped. The BCAS values only determine the share of the total property tax that each property is assigned.
But, if your BCAS value went up more than other properties in your municipality, then you should expect to pay higher taxes for the coming year because your property would then attract a larger share of the total tax bill. Of course, if your municipality increases their budget then you would expect your taxes to go up.
The second major misconception is that the BCAS values are the same as market values. In a perfect world, this would be true. But, in reality it is far from true. First of all, the BCAS values that are released each January are their best guess at the historical values from July of the previous year. Six months is a long time in the real estate world so that is caution number one. Second, BCAS does not visit homes, generally doesn’t know about any recent updating to increase value, and doesn’t know which homes have been neglected and are rundown. As you can see, they are missing some very important information. As a Realtor, I wouldn’t even consider assigning a value to home without a visit and an in depth analysis of current market conditions.
When we compare actual resale values to BCAS values we find that most properties sell with 20% of the BCAS value, either higher or lower. But, there are many exceptions to that as well. It would be too expensive for BCAS to visit every home each year to establish accurate values. And, even if they did go to this extreme, the changing market conditions would render their value inaccurate within months. The point to take away here is that the BCAS values are only a rough approximation of the value of a property. Their methods don’t allow them to prepare an accurate value. Furthermore, don’t focus on this value when buying or selling a property or you will go far wrong.
The third major misconception is that if your BCAS value goes up 10% then you should be able to sell your home for 10% more. This is incorrect. As you have just read, BCAS does not have ability to set accurate property values for individual properties. Realtors and appraisers can do a pretty good job of determining market value, but the only way to know what your home is really worth is to expose it to the market and see what the market will pay for it.
In conclusion, BC Assessment exists to set relative property values that are used to share tax among properties in a municipality. They do not pretend to set current market values for each home and do not have any say in a municipality’s annual property tax budget.
If you have any further questions, feel free to ask and we’ll do our best to answer them.
