What is BC Assessment?
BC Assessment provides a value for the government to determine property tax in British Columbia. The assessment authority estimates it yearly starting from the previous July. This is a predictable base for taxation but does not necessarily impact the real estate market. So, the dollar figure on your provincial property assessment notice is not always your home’s market value.
Here’s a look at BC Assessment value and market value and what contributes to these amounts.
How are BC Assessment values calculated?
It’s unfeasible to expect the assessors to visit each home in person, so they have to rely on the general property characteristics that place the most emphasis on the value of a home. As mentioned, assessors base this on information from the previous July, so it can be somewhat out of kilter.
The characteristics used for calculation are:
- The location of the property. That is, how desirable is the place it’s located?
- The size of the property. Is it a tiny house or a multi-room mansion?
- The size of the lot. Is it a small lot, or a massive multi-acre estate?
- View from the home. A mountain view is worth more than a line of dumpsters.
- The property age. Is it newly built or an outdated structure? It could also be historically valuable.
- Home add-ons such as carports, garages and decks.
- The sales’ prices from similar homes in your area.
As a result, BC Assessment gives you basic insight into whatever area you’re interested in. You can check out their website to find your property’s information or for a property you’re interested in.
Impact of BC Assessment on property taxes
Your BC Assessment value is one major factor of the property tax you pay, but it is not the only component. There’s also the property tax rate set by your local authority, what property class you’re in, whether your municipality implements land averaging and other factors.
Still, the assessed value of your home matters in this calculation and you can appeal it if you feel your assessed value is too high. For instance, this may happen if all your neighbours renovated their homes in the last year, which caused the assessed value for your area to rise, but you didn’t.
There are also minimum taxes that you must pay to ensure delivery of municipal services. These will exist regardless of other factors so you don’t lose access to things like firefighting, sanitation, water and other essentials.
What does a BC Assessment mean for homeowners?
For most of us, property is our highest-valued asset, so there’s concern when your assessed value drops. That’s particularly true for first-time homebuyers or sellers, who fear they won’t get a return on their investment. There’s also the concern you can’t renew your mortgage if you owe more than your assessed value. Fortunately, assessment value doesn’t necessarily impact market value.
Regarding mortgage renewal, if you have good credit and are renewing with the same lender, there should be no problem.
What is the market value of your home?
When it comes to calculating your home’s market value, there are quite a few more factors in the process. Ultimately, your house’s market value is whatever a buyer is willing to pay for it, but there are many considerations to get to that amount.
If you're looking to find the market value of your home, you’ll need a home appraisal. That's not a DIY option. You'll need industry specialists to help. A real estate appraiser will be able to give you an accurate indication of your property’s market value, which is useful if you’re looking to:
- Sell your home and want a fair market value. An appraisal gives you a realistic indication of your asking price so that you’re going in with misplaced expectations and your property won’t sit on the market for too long.
- Buy a home and want to ensure you’re paying for actual value. It's worth including an appraisal as a contingency for the home inspection. Should any problems arise that might impact the agreed-upon sale price, you're protected if you choose to get out of the sale.
Refinance your mortgage or insure your property. For lenders and financial institutions, an appraisal will ensure the homeowner is not over-borrowing when buying or refinancing a property.
What factors impact the market value of the home?
When an appraiser visits your home, here are some of the elements they will consider when figuring out the market value:
- The neighbourhood your home is in, including its amenities, access to transportation and other factors.
- The age of your property and whether it’s outdated, historically valuable or otherwise could influence its price.
- The lot's size and dimensions, plus anything that could impact future builds such as whether it's flat or sloped, in a flood plain or has many large trees with roots.
- The size of your home’s interior and the number of rooms. A larger home may be worth more than a smaller home.
- Your home’s layout and design, such as open-plan living areas. Wonky layouts may bring down the price, while thoughtfully designed interiors could increase it.
- Any additional items such as carports and garages, decks, number of allotted parking spaces or parking for RVs. For instance, a larger garage can increase the value of your home.
- Any home upgrades will impact the market value, such as renovations, furnaces, appliances, flooring or hot water heaters.
- If regular maintenance has been performed, such as roofing, gutters, re-painting and more.
- If this is a strata title property, the appraiser will also consider any special levies, the maintenance fees, reserve funds and how well-run the building is.
- The current real estate market trends—whether it’s a buyer’s or seller’s market.
- Comparable sales in the area within the last three months. Your home’s price likely shouldn’t be too far away from what your neighbours have sold for, since that indicates what buyers are actually willing to pay.
As you can see, although the B.C. property assessment provides an indication of your property’s value, it’s for the government to assign property tax. Even two similar properties might have different assessment values, because they don't necessarily correlate with your property's market value.
This article originally appeared on The Guide on REW.ca.
