Property assessment is a measure of
current or market value [provincial
terminology will vary somewhat], established
for the purpose of apportioning local taxes
within a municipality. Assessment is used to
determine the property owner’s share of
taxes.
Calculation
Municipalities raise money to provide
services such as garbage pick-up, sewers,
new roads and repairs, police, and
education. Most of this funding comes from
property taxes. Property taxes are
calculated based on a tax rate (typically a
percentage factor, but mill rates are still
used in some jurisdictions).
The tax rate is established by dividing
the budget for the current year by the total
assessment. Different rates are applied to
various classifications of property, e.g.,
residential, multi-unit residential,
industrial, commercial, and farmland. The
property classification structure varies by
province but the intent is the same.
Assessed Value
The value of a property according to the
tax rolls. Market value and assessed value
do not necessarily coincide although
assessed value is usually based on market
valuation using sales of comparable
properties. Assessment authorities update
assessed values on a periodic basis to
ensure fair valuation.
Assessment Process
The ongoing process of inspections,
reviews, and statutory general
reassessments. The assessment roll is the
official record of real property assessments
and may be revised each year. The roll
normally contains a roll number (numeric
identifier), name(s) of the owner(s),
municipal address and legal description,
assessed value of land and improvements, and
applicable codes. An assessment notice is
then sent out to each owner shown on the
roll during a general assessment. If
revisions to the official assessment roll
are required between general assessments,
notification by way of an assessment notice
is sent to the property owner. An assessment
notice is not a demand for payment of taxes,
but merely sets out the assessed value of
the property for the ensuing year. The total
of the assessed value of all the individual
properties on the roll provides the base for
property taxation.
Improvements
One of the anomalies of a tax on real
property is that, in theory, critics argue
it discourages the improvement of property.
The basis for assessment is the fair current
or market value of the property. If value
goes up, the taxes may increase. Additions
or installations can affect property
assessment to the extent that they increase
the fair market value of the property as
calculated by the assessor, e.g., the
addition of a sunroom or an outdoor swimming
pool, extensive remodeling, the
addition/enlargement of a garage, or the
creation of a recreation room. Not all
improvements to a property are assessed for
taxation purposes, for example, normal
repair and maintenance, landscaping, lawns,
shrubs, fencing, private sidewalks, or
private driveways.
In planning personal finances, the
actual or prospective owner of a home that
requires extensive improvements should allow
not only for installments on any loan
required to finance work but also for the
possible increase in municipal taxes as a
result of that work.
Appeal
Municipalities forward assessment
notices in the early part of the applicable
taxation year. Property owners who feel the
assessment is incorrect or unfair may appeal
to the applicable provincial appeal board.
Generally, taxpayers cannot dispute taxes,
only the assessment on the property. In most
provinces, the appeal process is commenced
by completing and forwarding the appropriate
section of the assessment notice within a
specified time limit.
Typically, the appeal is first assigned
to an assessor who contacts the property
owner to review the assessment and address
matters of concern. This may result in
either an increasing or decreasing
adjustment, along with an amended assessment
notice; or the appeal may be withdrawn once
the assessment is fully explained to the
property owner’s satisfaction. If the owner
is dissatisfied, the appeal is forwarded to
an appeal board. Appeal boards in Canada are
established as impartial, quasi-judicial
bodies that have the responsibility to hear
assessment appeals with regard to assessed
value.
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