What you need to know about property assessment in Okotoks.
Assessment: What You Should Know
1. What is Property Assessment?
Property Assessment is the basis for allocating each property’s share of the total community tax. It is based on market value standard 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. It provides a basis for dividing up the total tax pie. Each property assessment value represents its proportionate sliver size contribution to the total municipal tax pie.
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.
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.
1. Why are assessment notices mailed before property tax bills?
Assessment notices are mailed in advance of the property tax bills to allow property owners the opportunity to review the assessed value and ensure it is reasonable prior to the tax bill being sent out in May.
2. When are Property Tax bills mailed?
Council sets the tax rates to be used in calculating property tax in April. Tax bills are mailed mid-May with deadline for payment June 30.
3. How can school tax support declaration be changed?
For information about changing school declaration, please visit www.okotoks.ca/taxes and scroll down to School Declaration tab.
4.Will an increase in assessment equate to an increase in tax?
No. It is a popular misconception that an increase in assessed value directly equates to a tax increase.
- Property tax might increase, but it is not because of increased assessment.
- It is a fact that assessors have no authority to levy tax. Only Town Council has authority to levy municipal tax.
- Tax levy is dependent on and is a function of Town Operating Expense Budgets and Provincial Request for Education funding.
- Tax will increase because of increased Town operating budget and, or, increased requisitions from the Province for education funding.
- The assessed value only allocates each property's proportionate share slice of the total tax pie.
5. If the norm is that most properties increase in value by say 5% and mine increases 5% what would be the tax consequences?
No change in tax. All other things being equal, meaning the same Town operating budget as the previous year and same provincial request for education funding, tax will remain the same as last year. In the event there is no increase in Town operating costs, tax may drop should more buildings be constructed in the Town.
Again, all other things being the same, if your assessed value increases less than the average increase your tax levy will drop, assuming the Town operating budget remains the same, and the Provincial request for education funding stays the same as the previous year.Conversely, should your assessment increase more than average, tax will increase.
6. If market values are dropping would my tax be lower if the valuation date was the same day the Assessment or Tax Notices were mailed?
- No, because the value of all properties in the community will have dropped so the distribution of the total Town tax would still be allocated the same. Each property would retain its same share sliver of the total municipal tax pie.
- The assessed value only allocates each property's share of the total Town tax requirement.
- What is the tax significance of an assessment increase greater than the average?
Depending on the amount of difference the tax impact is usually less than expected.For example assume two $500,000 properties increase in value at 5% and 10% respectively and the tax rate is 0.75% the following illustrates the significance of one property increasing in value more than another.
$500,000 +5%= $525,000 value x 0.75% tax rate = $3,938
$500,000 +10% = $550,000 value x 0.75% tax rate = $4,125
Tax Difference $187=4.7% marginal tax increase
- Does an annual value assessment system create a disincentive for improving my property?
- The ratio of tax to value is extremely low.
- Many improvements will not increase the assessed value.
- It takes a great deal of capital expenditure to increase an assessed value.
- The improvements must be significant to that of adding space or increasing the building class.
- The cost of making improvements to existing buildings will not add proportionately dollar for dollar to assessment value, as the assessment is based on comparisons of sale prices of similar property.
- To illustrate the influence of the low tax to value ratio consider a major improvement cost of $100,000 and make a major assumption that all that expense proportionately increases value, the following illustrates the tax implication:
$100,000 added value x 0.75% tax rate = $750 additional tax
- If my property tax increases will the level of my municipal services also increase?
The amount of property tax allocated to each property is correlated with the amount of property value. Municipal tax is exactly that; a tax. It is not a fee for services rendered on each individual property. It is a tax levied in relationship to value. Municipal tax paid is akin to federal income tax paid, which has no direct relationship, to services rendered for each taxpayer. Municipal tax paid is in relation to the property value and is not an accounting of services rendered to each individual property.
9. What is the Seniors Property Tax Deferral Program?
Seniors in Alberta now have the option to defer their residential property taxes to keep extra money in their pockets and enable them to stay in their homes longer. Through the Seniors Property Tax Deferral Program, homeowners 65 and older can defer all or part of their residential property taxes through a low-interest home equity loan with the Alberta government. The loans are repaid when the home is sold, or sooner if the senior chooses. For more information, visit the Seniors Property Tax Deferral Program
1. I purchased my property very close to the effective base valuation date so how can my assessment be higher?
In addition to the variance inherent in the transaction zone, as previously explained, the assessed value does not attempt to value every person's individual personal preferences, requirements, or access to capital. Assessed value reflects the most probable transaction price from the perspective of the most probable buyer as evident by an average price indicated by a comparison of the transaction prices of a number of similar properties. Some assessments will be higher and some will be lower, but on average the median assessment is expected to be on the median sale price of similar properties. A lower purchase price at time of the effective date of the assessment may indicate a good buy when compared to its competitive group.
Assessment values are determined by mass appraisal methodologies, which use a common approach and data to provide typical valuations. Similar properties will have a range in prices. Sale prices may be at the upper or lower end of the range. A property’s sale price can occur outside the range, but the assessment can still meet legislated standards.
2. I have an appraisal report prepared by a professional independent appraiser who is certified by the Appraisal Institute of Canada which indicates a lower value.
Check the purpose and function of the report, the effective date of the valuation, interest valued, and Limiting Conditions regarding use of the report. If those match assessment parameters, with an effective date close to July 1, then it would be appropriate to send a copy of that report to the assessors for discussion.
3. My real estate agent agrees the assessment is too high.
Although realtors have access to good sales data through the multiple listing services (MLS) there are a significant number of properties that do not sell through the MLS system and are included in the assessment analysis.
Agents are exactly that, professional facilitators with vested interests in the wellbeing of their clients.Agents are hired for the function and roll of representing their clients and client interest to the best of their ability in putting together purchase and sale agreements. See Canadian Real Estate Association Code of Ethics and Standards of Business Practice Section 3 "A Realtor shall protect and promote the interests of his or her Client."As well as the Alberta Real Estate Act Part 2 Division 2 Section 57 (a)"...and to promote the interests of the seller;” as well as Section 58(a)"...and generally to promote the interests of the buyer."
The functions and purposes of real estate agents conflict, and do not align, with the assessment purpose of objectively preparing mass appraisals based on fairness and equity for the entire community, and subject to Provincial assessment quality standards and audit.Agents are not bound by any assessment standards or appraiser objectivity responsibilities, tests, or reporting requirements.See Alberta Real Estate Act Part 2 Division 4.
4. What would cause my assessment to increase more than others?
If there have been no significant improvements to the property such as additions, or garage added, etc., an increase greater than the norm indicates the reassessment objective is working. Updated property sale data indicates that market participants are now prepared to pay proportionately more for your property type, and, or, location compared to others.
5. Why has my assessment increased when market value has decreased?
There are a number of factors that go into determining assessed values. A variety of changes including extensive renovations, basement development, garages, additions, fireplaces and decks can alter the assessed value of a property.
The assessed value is determined through an analysis of properties that have sold.Different neighborhoods or dwelling types may appreciate or depreciate in value at different rates year to year.
The average market value of single family homes may have decreased overall, but the difference between each neighborhood or property type may not match the overall year to year change.
6. Why is my property assessment higher than my neighbours? Check:
Are both properties similar in type (two storey vs bungalow)?
Are they the same size?
Are the lot sizes similar?
Are there locational differences?
Are they similar in age or have there been additions, renovations?
Do both properties have garages or basement development?
Does the neighbor border main traffic corridor?
Any or all of these factors can influence assessed values
1. What if I have a concern or believe there is an error on my property assessment notice?
Call Assessment Services: Phone 403-995-6313 to make an appointment with an assessor by clicking: Contact Us
2. How do I file a complaint?
Provincial legislation and Town bylaws outline how complaints must be made. The complaining must be submitted in writing on the form set out by the Government of Alberta Assessment Review Board Complaint Form. It is important that all questions be answered on the complaint form that are relevant to your property, including:
- What information on the Assessment Notice is incorrect,
- In what respect that information is incorrect, including identifying the specific issues related to the incorrect information that are to be decided by the Assessment Review Board and the grounds in support of the issues,
- What the correct information is,
- The requested assessed value, if the complaint relates to an assessment.
- Be sure to include a statement specifying the date and outcome of discussions with the assessor including details of any issues or facts agreed to. If you have not discussed the matters of the complaint with an assessor, specify why a discussion was not held. You may attach additional information to the complaint form if the space provided is insufficient.
- An Assessment Review Board must not hear any matter in support of an issue that is not identified on the complaint form.
- You must include your mailing address.
- Should you have an agent file a complaint on your behalf, you must complete and sign the Assessment Complaints Agent Authorization form Assessment Agent Complaints Authorization Form.
- Your complaint form must be accompanied by the appropriate filing fee or the complaint will be invalid.
- Incomplete forms, complaints submitted after the final date of complaint, or complaints without the required filing fee are invalid.
3. How much are complaint fees?
Complaint fees for the assessment complaint process are as follows:
Residential: 3 or fewer dwellings and farm land under one roll number - $50 per complaint
Residential: 4 or more dwellings - $325 per complaint
Non-residential: $650 per complaint
Complaining forms and fees may be dropped-off or postmarked on or before the final date of complaining at the Town of Okotoks, 5 Elizabeth Street, PO Box 20, Okotoks, AB T1S 1K1. For further complaint process information the Assessment Review Board Clerk may be contacted at 403-995-2784.