When our appraisers are inspecting a property, we often get questions about tax assessment. We want to try to clarify some of these commonly asked questions. GVS is one of the industry leaders in appraisals for tax assessment purposes. In fact, last year we worked on a pilot program with the University of Manitoba Statistics Department where we explored the statistical relevance of a property assessment in relation to the selling value of a home. Before we get into the results, I think we should explain what is the difference between a home appraisal and a tax assessment.
A Tax Assessment is a value used by the City or Municipality to value a building for tax purposes. The government typically uses in-house valuation personnel to calculate this value and this is done typically once every two years. The data is collected from assessors and inspectors who will do site visits to residential properties when a permit is pulled or sometimes via random inspections. This information is public knowledge and can be accessed through the City website or the Government of Manitoba website. The websites links are provided at the bottom of this blog. The website will also highlight some important aspects about the home including the site size, building descriptions and location on a map. The tax assessed value is calculated through a statistical software program that isolates variables such as location, size, year built and number of bedrooms and bathrooms. Tax Assessments use sales data provided by MLS and Land Titles.
A Residential Appraisal Report is a value reconciled by a Certified Residential Appraiser (CRA). The most prestigious certification comes from the Appraisal Institute of Canada (www.aicanada.ca). An appraisal report is a much more in-depth look at the specific property. Appraisers use at least two to three different approaches to reconciliation of value for a property including a comparable approach, a cost approach, and an income approach. GVS takes this one step forward and also provides a statistical analysis report which includes the median sales range of similar properties in the area over the previous 5 years as well as the accuracy of the assessed value to the sales value of similar homes in the area.
Here are some commonly asked questions we often get from our clients:
"How accurate is my tax assessment in determining the value of my house?"
This is one of the most common questions we get. It is important to remember that the intent of a tax assessment is not to establish a value for the sale of a property. Again, the government uses a mass appraisal system to determine this value and this means some variables that are not that influential on a particular property are used to determine the value. The assessed value should not be the only thing that is considered when listing a property. When GVS teamed up with the U of M, our pilot study showed there was a significant overall difference between what the assessed value of a property was and what the sale price of the same property was. Again , remember these values are only being calculated once every two years so the further away from that date you get, the more likely it is that the assessed value is inaccurate.
"Will the bank lend me money based on my assessed value?"
Although all financial institutions have different policies on lending, it is very rare that these institutions will put a lot of weight on the assessed value for lending purposes. Again the intent of a property assessment is to establish an accurate property tax amount.
"How does my assessment affect my property tax?"
Your assessed value is only one component in establishing your property tax. The City or Municipality you live in will collect this data on all houses and work with the averages. According to the City of Winnipeg
"How property taxes may impact an individual property can be understood as the extent to which the property's assessed value has increased in comparison to the average increase for all other properties. In general, if a property's value increases above the city-wide average, property taxes could be higher. If a property's value increases below the city wide average, property taxes could be lower. If a property's value increases at roughly the same rate as the city-wide average, property taxes could remain unchanged." (www.winnipegassessment.com/AsmtTax/English/previewprogram/faq.stm#7)
Once the City or Municipality has the property tax information for a property, they use what is called a "mill rate" to determine the amount of the property tax. The mill rate is the amount of tax payable per dollar of the assessed value of a property. The mill rate is based on "mills." It is a figure that represents the amount per $1,000 of the assessed value of property, which is used to calculate the amount of property tax. (www.investopedia.com/terms/m/millrate.asp).
"How do I challenge my tax assessment?"
This is most often done once a year at an annual meeting. a citizen has the opportunity to dispute the value of the property tax at this meeting. This is where a GVS appraisal report can be very important. The information provided in the report will depict an accurate value of your home based on relevant market research. The GVS appraisal report will go a long way in helping to dispute this value.
"If I order an appraisal, will the value affect my property assessment?"
The answer to this is NO. Fee appraisers do not share any information with Municipalities or City Assessment Departments.
If you have recently received an assessment from your City or Municipality Assessment Department that you think is incorrect, we encourage you to hire us to help. We will offer in-depth information to help make sure your assessments are accurate and fair.
GVS
Your home's worth... Our firm’s word!
www.winnipegassessment.com/AsmtTax/English/Propertydetails/
www.gov.mb.ca/mr/assessment/index.html
www.brandon.ca/taxes-assessments
Need an appraisal? We can help!
https://www.gvshomevalue.com/book-appraisal
