What is BC Assessment?
BC Assessment is a provincial Crown corporation that determines the market value of all real properties in British Columbia. After determining the correct classification, actual value and exemption status of every property, BC Assessment provides taxing authorities with an Assessment Roll, which lists all properties, names of the owners and the taxable values of the land and any improvements (buildings).
The assessment and taxation of real estate in British Columbia has existed since before 1860. BC Assessment was established in 1974 to replace municipal and provincial government assessment offices. The independent, publicly funded corporation was created under the Assessment Authority Act to produce and maintain uniform property assessments across the province. BC Assessment evaluates most properties in B.C. based on market value, which is considered the fairest way to assess property.
The Ad Valorem Tax System
British Columbia uses an ad valorem ("based on value") system of property taxation. Only real property value (land and buildings) is taxed. The value of personal property such as cars, jewelry and furniture is not taxed.
The property assessment and taxation system in British Columbia is a two-step process involving BC Assessment and the various tax authorities. BC Assessment determines the classification, value and exemption status of property. Tax authorities then apply their tax rates to assessments. This determines how the tax burden will be shared among all property owners – residential, commercial, industrial, farm, etc. Property tax provides approximately 40 per cent of local government revenue in Canada and is the major source of revenue controlled by local government.
This market value is determined by following generally accepted appraisal principles. Each year the assessor takes into account location, size, topography, shape, replacement cost, age, condition, rental income and sales of comparable properties in the area, as well as any other factors that might affect the property's value, to determine what the property would sell for. The market value of property is recorded on the annual Assessment Roll.
Who are the tax authorities?
Tax authorities – the provincial government, municipalities and some First Nations – control most of the tax burden by setting rates to raise required revenues. Tax revenues are used to provide transportation, schools, health services, recreational facilities, police and fire protection, water, sewer systems and garbage disposal. Other authorities (regional districts) raise money for services by providing their budgeted amount (requisition) to the local tax collectors. These amounts appear on your tax bill.
What is market value?Market value for assessment purposes is the price an unencumbered property would sell for on July 1 of the preceding year if a reasonable amount of time is allowed to find a purchaser.
How is market value determined?
When establishing the market value for a particular property, BC Assessment considers each property's unique characteristics. These are the same characteristics that a home purchaser would consider, including size, layout, shape, age, finish, quality, number of carports, garages, sundecks and condition of buildings. Services in the area, location, views and neighbourhood may also influence a property's market value.
Appraisers may enter a home to conduct property inspections, ensuring that the description and condition of a property is accurately reflected on the Property Assessment Notice. BC Assessment appraisers analyze all real estate sales in their area and develop common units of comparison and corresponding values. They review similarities and differences between properties to arrive at a uniform assessed value for a particular property.
Why do assessments increase and decrease?
Changes in assessment reflect changes in market value. Market value can change for the following reasons:
- a property may have improved (e.g., a renovation or addition);
- demand for property in the neighbourhood may have caused prices and market values to rise or fall; and
- a change in zoning may have affected the value of the land.
How can similar properties have different values?
Similar properties may have different values because:
- the properties may be located in different neighbourhoods;
- the zoning for each property may be different; or
- an adjoining use may affect one property and not another (e.g., one property is located next to an industrial plant).
The Assessment Act requires that most land and improvements be assessed at market value. Exceptions include utility properties, such as railways, pipelines, power lines and farm land. These properties are valued at regulated rates.
Property tax is a tax on wealth, sales tax is a tax on consumption, and income tax is a tax on income. Considered together, these taxes generally insure that people with greater wealth or greater ability to pay, contribute more tax. For those who cannot afford to pay property taxes (e.g., some seniors and disabled persons), tax deferment and tax relief measures are available.
For more information, contact your local BC Assessment area office.
Courtesy of BC Assessment web site