New Year, New Notice of Assessments

The new year means new property tax assessments. Today, I wanted to dispel a few myths about how these taxes are calculated and what they mean to your home's value.

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Happy New Year! The new year always brings that pleasant little surprise: your notice of assessment.

It was probably a bit of a sticker shock to you when you opened it—I know it was for me. That's why today, I wanted to take a minute to talk about the assessment; what it is, how it's derived, and what it means to you as a homeowner. I want to provide a bipartisan, neutral overview of the assessment, not an opinion.

First, know that your assessed value isn't your market value. The assessment is a snapshot from the assessor's mind of what your home would've sold for on July 1st, 2016. A lot has changed since then. The assessment doesn't know if you spent $200,000 on renovations, whether you haven't updated the house since 1979, or even whether you knocked a wall down to turn a 3-bedroom into a 2-bedroom.

These factors all play a role in fair market value—what a buyer is willing to pay for your home and what you are willing to accept. In fact, even just two or three years ago, it was common for North Delta homes to sell well above their assessed value.

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Assessed value and fair market value are not the same thing.

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When it comes to determining fair market value for your home, we don't consider assessed value. We want to instead look at what's going on in the market, what comparable sales look like, what your home's features, benefits, upgrades, and location are, among many other variables. That fair market value will be different at any given time throughout the year.

Assessed value is merely a derivative of determining what your property taxes will look like.

Speaking of property taxes, recently, folks have reached out to me after seeing their assessment go up by 50% and are fearing that their taxes will go up 50% as well. That's simply not true. Here in North Delta, for example, the municipalities look at the situation and say that on average, assessments have gone up by 44%. We'll all see a 3% increase in property taxes regardless, simply to keep up with the rate of inflation.

So let's assume your assessment went up by 50%. That's 6% above the average, meaning they will take your 6% plus the 3% for inflation, so you should expect to pay roughly 9% more in property taxes than last year. If your home only went up 40% in assessed value, then you can actually expect to pay less than last year. The council meets in the spring, when they determine their budgets. They will determine what they need to balance their budget to run the municipality and pay for things like schools, hospitals, and roads.

Remember, you have until January 31st to appeal your assessment. There's a process in place to do this and I'd be more than happy to walk you through it. Just give me a call and let's talk soon.