1. What is property assessment and what is it based on?
Property Assessment is the basis for allocating each property’s share of the total community tax. It is based on market value estimated as of July 1 of the previous year. The objective is to provide a basis for distribution, or allocation, of tax required to operate the Town and pay the Province for education funding requirements. The assessment system provides a consistent, open, accountable and equitable basis for levying municipal tax and for dividing up the total tax pie. Each property assessment value represents its proportionate "sliver size" contribution to the total municipal tax pie.
- An estimate of the typical market value of your property developed for the purposes of determining your portion of the municipality's property tax.
- The values for those parcels deemed taxable generate property taxes.
- The assessment and taxation process is governed by provincial legislation; your property assessment notice is based on a July 1 market value estimate, as measured by the real estate marketplace (i.e. property sales).
- Market Value is the most probable price that a property would sell for as of a given date.
- The purpose is not to reflect one sale price, but to assess all similar property at a similar value so that taxation is fairly and uniformly distributed among all taxable property.
- Mass appraisal is the process of valuing groups of properties as of a specific valuation date which is July 1.
- Provincial legislation requires that mass appraisal be used to calculate market values.
- Both mass appraisal and single-family appraisals are methods for arriving at estimates of value differing only in scope;
- Single-Property: Represent the market for one kind of property in a limited area, more site specific.
- Mass Appraisal: Valuing groups of properties, the mass appraisal process results in values that are accurate in relation to the market value standard and uniform in comparison to similar properties.
2. Why is the assessment valuation date last July?
This is a Province wide statutory requirement which allows all assessors across the Province to annually analyze all market and sales data, draw conclusions, and conduct valuations prior to mailing Assessment Notices each year. All properties are assessed with the same effective date so all assessments are uniformly updated at the same time.
3. Why use a market value standard?
The market value standard is a legislated and regulated valuation standard based on the premise that the amount of tax a property can pay is directly proportionate to the value it is worth. The concept is that the greater the amount that can be paid for a property, the greater the amount that can be paid for municipal tax. The resulting tax is a type of tax on wealth. Wealth measured in terms of property value. Market value standard generates values that can be readily compared for fairness to open market sales activity.
4. How is the assessment system an open and accountable process?
The assessment roll is available for anyone's review and values are posted on the Town website. The assessment roll is submitted every year to the Province for independent review and audit. Every property owner can see and compare its assessment to others and has a right of appeal. The assessed value is not an arbitrary number but a value tied to a tangible standard for which owners can directly relate. Property owners can draw on their own independent information for comparison, and, or hire independent appraisers for objective comparisons. Your property characteristics are measured against other properties that have sold in order to calculate a market value. Characteristics such as location, age, size and others are all considered.
5. If reassessments are not a means for generating more tax revenue why are properties valued so frequently?
The intent of reassessing properties is to retain the competitive placement of each property in the assessment hierarchy. The reassessments ensure that all properties are assessed and paying tax on an equitable basis when compared to each other. Reassessments adjust assessments to reflect differing rates of value change between various property types and areas. The intent is to ensure each property retains its relative competitiveness and contribution to the total assessment pie. Certain property types or neighbourhoods can experience value changes at differing rates. The reassessment reflects differing value change rates to ensure all properties are retaining their respective share slice of the entire Town assessment pie.
6. Why are assessment valuations prepared so frequently, on an Annual basis?
To quickly reflect shifting values relative to the norm, or each other. To ensure no given property type or area is penalized with assessments too high when its value may have dropped or not have increased to the extent of other properties.
7. How does the current Alberta annual valuation cycle compare to other jurisdictions and past history?
Other assessment jurisdictions have varying valuation cycle periods. Tax levies each year do not remain constant. For reference, other assessment cycles are:
Saskatchewan: 4 years
Manitoba: 2 years (had been 4 years until 2008)
Ontario: 4 years
In Alberta prior to mid-1990's and prior to implementation of the Municipal Government Act the reassessment cycle was once every seven years. While the valuation base year stayed the same for seven years, tax levies did not.Tax levies are always adjusted to Municipal revenue requirements.
8. How much accuracy is there to assessed values?
Assessed values should not be viewed as an absolute number. Values are not developed in a laboratory or clinical type of controlled environment. The valuation of real estate does not work that way. Real estate valuation is based on market observations and comparisons. The market is an imperfect environment and not a controlled structured setting.
There is a range in price purchasers will offer and a range that sellers will accept. So there is a transaction zone for every property transaction. Differing property types will have varying tolerances to an actual deal. In addition to ranges inherent to individual deals, assessed values are generated on a mass basis which indicates precision to assessed values is a great deal less than 100%.
Provincial Audit standards require that the Average Assessment within a competitive group is to be within 5% either higher or lower than the average sale price within that group, and the range within a set of comparable sale properties can well exceed 10%. Generally Assessment Complaint tribunals will not consider adjusting an assessment where the request is for anything less than 5%.
The resulting tax effect on assessment differences is minor. For illustration of tax influence on a 10% assessment range consider the following example:
$500,000 assessment x 0.75% tax rate = $3,750 tax
Change by 10% difference
Compare $550,000 assessment x 0.75% tax rate = $4,125 tax
10% Difference $375 per year or $31/month
A 5% difference equates to $188 per year or $16/month
9. How are home sizes calculated?
Assessed sizes come from original building construction plans and are confirmed or updated with periodic assessor inspections.
10. How are lot sizes calculated?
Lot sizes come from registered plan of subdivisions registered at the Land Titles Registry.
11. How are assessed values kept fair and reasonable?
Assessed Values are determined based on comparisons made of each property’s characteristics to similar properties which sold. It is important to note the assessment value date is of July 1 of last year.
12. How do renovations or additions affect my assessment?
Your assessment is based on typical market value, so any significant changes to your home will likely impact its market value. Therefore, your property assessment will likely change accordingly.
13. How many properties are assessed each year in Okotoks?
Over 12,000 properties assessed each year.