Tuesday, May 22, 2012

Local Taxes and then some..

Local property taxes are a confusing morass. When property prices rise, the assessed value rises and people think that their taxes go up because of that.

Well they do and they don't.

Lets remember how they assess the property taxes...

BC Assessment Authority estimates the value of your home supposedly compared to equivilent properties that recently sold. The municipality then multiplies this by the tax level eg 0.4% or 1% is mutiplied by the home value and you have the tax payable. Here is a typical schedule of assessment for a municipality, in this case Surrey.

So of course if the value of the property goes up the amount payable goes up.

However even if property prices fall, unless they cut services, the municipalites need the money to pay for the garbage and policing and rec centres and so they would just have to increase the level of taxable rate to make up for the fall in property prices.

Here is a nifty calclator for the whole of the GVR.

Of course when property prices are rising, the municipalities should be lowering the tax rate and giving home owners a break. But human nautre being what it is, when property prices go up, the municipalities get flush with cash and build shiney rec centres and new infrastructure projects and when prices start going down, they wonder how to fund them and have to raise the taxable rate.

There are ways of reducing the property taxes with a home-owner grant and additional grants if you are over 65 or disabled.

Some municipalities also allow the over 65 and disabled to defer property taxes until the property is sold, a very noble proposition, except I have seen very wealthy seniors getting grants and deferring while a working family struggles to pay their share.