Homeowners in BC recently received their yearly tax notice featuring their new assessed value – with a big surprise. Assessed Values of all properties dropped A LOT! Potential Sellers have been asking if this is what their home is worth now and Buyers think they’re overpaying. Neither is true! Assessed value DO NOT represent real estate value. They are very different numbers used for different reasons and determined using different factors.
The BC Assessed Value – which you can look into here: https://www.bcassessment.ca/ – is a property value assessment used for tax purposes. Typically, the assessment is not determined by a visual review of the property nor does the assessment consider interior upgrades to properties. It would consider if the property had a large addition or was re-built but in general, the BC Assessment office won’t know about the new roof you put on, that $150k kitchen renovation, the nice but unauthorized basement suite, etc – all major factors in real estate value. In addition, assessments don’t include the small things that can really affect real estate value like specific neighbourhoods, walk score, outdoor space, privacy, maintenance records and more.
For a simple example, my own 1 bedroom condo in Mount Pleasant saw a $60k drop in its assessed value this year, yet I could easily sell my condo in the current real estate market for more than $115k over my current assessed value.
Assessed values are always behind real estate value – part of this is because assessments are determined the June prior (~6 months) to when they’re officially released. In the case of the current assessed values, the real estate market was down in the summer, but it picked up throughout the fall and continues to show signs of activity and increase (I’ve been involved in quite a few multiple offer situations already this year), so real estate values have been increasing ever since the summer. You might see some realtors advertise properties as “under assessed value” but that’s only because it sounds like a deal, not because it truly means anything.
Homeowners are able to challenge their assessed value, and in that case, an Assessor might come through the property to have a look and create a new assessment based on more specific details, but you run the risk of the Assessor thinking the property assessment should be increased (along with your taxes). Assessed values are altered every year on a grand scale. For instance, owners of condos in East Van would see a similar change in their assessed value. One other detail to keep in mind – most of your assessment is based on land value, with the building value contributing to a smaller portion of the total assessment.
Wondering why your taxes didn’t go down despite your assessed value dropping significantly? That’s because what you pay in taxes is all relative to your neighbours value. So if your assessed value dropped by 10% along with everyone else in your area, you are all still comparable to each other. However, if someone builds a new mansion, their new assessed value will be increased significantly compared to their neighbours smaller, older house.
Overall, don’t let assessed value affect your idea of real estate value. Real estate value is based on recent comparable sales in the neighbourhood and building, along with the general trend of the real estate market, always considering the minor details that can affect value.
If you have any questions, or would like to know the real estate value of your current property, don’t hesitate to email: [email protected].
