You may have questions upon opening your new municipal property assessment… and occasionally feel a shiver down your spine. Is that really what my house is worth? Will I pay more taxes? Can I dispute it?
Municipalities rely on the assessment roll to calculate how much municipal and school taxes to impose on their citizens. Municipalities carry out this assessment, as established in accordance with the Act Respecting Municipal Taxation, every three years.
A combination of three main methods is employed for assessments:
- Comparison: based on sale prices of similar properties in the neighbourhood
- Cost: the building’s replacement cost – depreciation + lot value
- Income: relevant in the case of income properties
But beyond numbers and viewpoints, a few myths still contribute to widespread confusion on the topic.
Myth 1: “If the Value Increases, so Will My Taxes”
A hike in assessment value doesn’t automatically lead to a hike in taxes (although it can happen) since municipalities adjust their tax rate according to the sector’s average increase to maintain the same overall income.
In other words, if all the properties in the sector appreciate in value, the rate decreases proportionally, and you may even end up paying less tax if your property’s new higher value is still below the average.
Myth 2: “It’s to Municipalities Advantage to Raise Values”
The assessment serves to distribute the tax burden fairly among all property owners, based on their property’s market value on a set reference date. Municipalities then prepare their annual budget (roads, schools, snow removal, water, recreation, etc.).
Once municipalities have established their budget, they adjust their tax rate to generate the revenue needed to cover this budget. So, a general appreciation in property values doesn’t automatically mean more profits for the City.
Myth 3: “The Assessment Value Corresponds to the Price at Which I Can Sell My Property”
No, there isn’t always a correlation.
In fact, the assessment represents an estimate based on the methods stated above while a building’s market value corresponds to the price at which it can be sold. Thus, the price can vary according to the market (supply and demand), the type of buyer, the negotiations, the property’s condition, etc.
A real estate broker has the expertise required to determine a fair sale’s price for your property.
Myth 4: “I Can’t Dispute an Assessment”
This one is false! Different reasons can justify a review request, such as a full or partial demolition, nuisances in the area, a mistake in the property’s characteristics, or a change of use.
If the property’s assessment value decreases following a review, the amount of municipal taxes the owner has to pay may follow; however, a review can also result in an increase or no change in value at all.
To summarize, the municipal property assessment is a neutral tool employed to calculate taxes. It wasn’t designed to generate extra income for municipalities. As a property owner, you have access to recourse mechanisms to dispute an inaccurate assessment… but don’t miss the deadline to submit your request!
