If you own a house in Metro Vancouver, your property tax notice may have been a surprise. It is no secret that single-family housing in Vancouver and the Metro area is getting more expensive. And there are many people who have a suite in their basement, not for any extra cash, but as the way to pay for the property taxes, which are now approaching the north side of $10,000 a year in many places. There is tax relief for houses that are valued at under 1.2 million dollars, but the regional benchmark price is now 1.4 million as of May 2016. Most housing is worth more than 1.2 million dollars now.
Once you hit 55 years of age, you can defer your property taxes and pay a low rate of interest. The real problem is for folks who live in houses that are suddenly worth more than 1.2 million dollars, and are, well, young.
Stephen Quinn in the Globe and Mail describes this dilemma this tongue in cheek way:
Yes the owners of single-family houses…who disproportionately suck up municipal services, who encourage sprawl and who are essentially subsidized by condo dwellers and other people who live in more ecologically responsible homes, are under attack”.
Mayor Darrell Mussatto of the City of North Vancouver has asked the Province to separate single-family houses from condominiums and multiple-unit dwellings so owners of single-family homes could get a tax break. However, it is single-family residences that have received the large equity lift, not condominiums and multiple-unit dwellings. Since single-family homes consume more services such as roads, sidewalks and infrastructure, they should be paying more. Real estate guru and developer Michael Geller agrees.
Stephen Quinn does make one very good point though-if people are paying property tax for a single-family dwelling assessed at a certain value, they should be selling the house at that value. That would be one way to maintain affordability in an upward market.
“if people are paying property tax for a single-family dwelling assessed at a certain value, they should be selling the house at that value.” Let’s unpack that a bit. Property values are assessed by a small number of faceless bureaucrats who have neither the time to individually assess or the access to properly assess the value of your home. So these numbers are meaningless and have always been meaningless, not just in rising real estate markets but even in stable or falling markets. What sense then does it make to base selling prices on those assessments?
Ask a bank. The assessments aren’t meaningless to them.
Shall we regulate the price of bread and shoes, too ?
It makes sense to separate condos from houses from a mill rate classification point of view.
We need to also get the BC assessments into the modern age ie to market. Houses routinely sell for 30-50% above assessment. Some folks should be fired in that department if they are unable to do their job.
The assessments are just one large generalization of value using a broad swath of estimates and data and arriving at a value, for only property tax purposes.
Appraisals are a different thing.
Properties are appraised for;
Replacement cost: Based on building materials and labour costs at that moment in time. This does not include land.
Market Value: What an estimated sale of the property would realize.
Investment Value.
Value in Use: As in a rental property.
Liquidation Value: Valuing any resealable items or components.
and in Vancouver, Up-Zoning Potential Value.
Quinn is using his usual sardonic tone but a Real Estate agent’s fiduciary duty and obligation is to secure the highest price possible for a selling client.
There’s a service station at 2895 22nd Ave E (@ Renfrew). The land was last assessed at $1.55M – figure it’s $2M now. The structure is a solid, functioning repair facility with several employees. It is assessed at $6,800.00.