The dollar figure on your provincial property assessment notice is not necessarily your home’s market value. Here is a look at BC assessment value and market value and what contributes to these amounts.
What is BC Assessment?
The BC assessment provides a value for the government to determine property tax amounts in British Columbia. The assessment authority will determine the values estimated from July the previous year, so the current assessment will be calculated from July 2020. This is a predictable base for taxation but does not necessarily impact the real estate market.
How Are BC Assessment Values Calculated?
It’s unfeasible to expect the appraisers to visit each home in person, so they have to rely on the general property characteristics that place the most emphasis on the value of a home. As mentioned, this would be based on information from the previous July, so it can be somewhat out of kilter.
Characteristics used for calculation
- The location of the property;
- The size of the property;
- The size of the lot;
- View from the home;
- The property age;
- Home add-ons such as carports, garages, and decks; and
- The sales’ prices from similar homes in your area.
BC Assessment Tools
The BC Assessment Authority gives you insight into the property market of whatever area you’re interested in. Check out their website to find relevant property information.
- Property details: This includes the BC assessment value for the current and previous year, sales history; property size and number of rooms; and legal description.
- Sold properties: You can compare property sales and compare them with their assessment values.
- Neighbouring properties: You can compare the assessed value of houses in the neighbourhood.
Impact of BC Assessment on Property Taxes
It’s important to note that your BC assessment value doesn’t have a massive impact on your property taxes as it’s more to do with the area as a whole. The neighbourhood requirements such as garbage collection and street cleaning still need to be factored in, so lowering taxes might impact service delivery.
What Does a BC Assessment Mean for Homeowners?
For most of us, property is our most valuable asset, so, understandably, there’s a concern when your assessed property value decreases. Particularly for first-time homebuyers or those looking to sell their property and are concerned they might not get their return on investment.
There is also the worry that you can’t renew your mortgage if you owe more than your current home’s assessed value. Fortunately, the BC assessment value doesn’t necessarily impact your home’s market value. Regarding mortgage renewal, if you have good credit and are renewing with the same lender, there should be no problem.
What Is the Market Value of Your Home?
When it comes to calculating your home’s market value, there are quite a few more factors in the assessment. Your market value is what a buyer is willing to pay for it, but there are a few considerations to get to that amount.
What Factors Impact the Market Value of the Home?
When an appraiser visits your home, here are some of the elements they will consider when figuring out the value:
- The location of your home and its proximity to various transportation routes and amenities.
- The age of your property.
- The lot's size and the lot dimensions could impact future build such as whether it's flat or sloped, in a flood plain, or has many large trees with roots.
- The size of your home’s interior and the number of rooms.
- Your home’s layout and design, such as open-plan living areas.
- Any additionals such as carports and garages, decks, number of allotted parking spaces, paring for RVs.
- Any home upgrades will impact the market value, such as renovations, furnaces, appliances, flooring, or hot water furnaces.
- If regular maintenance has been performed, such as roofing, gutters, re-painting, and more.
- If this is a strata title property, the appraiser will also consider any special levies, the maintenance fees, reserve funds, and how well-run the building is.
- The current real estate market trends – whether it’s a buyers’ or sellers’ market.
- Comparable sales in the area within the last three months.
What Are the Main Differences Between the Assessed and Market Value?
It’s quite clear that the BC assessment value will not always correlate with the actual market value, and here are the three main reasons why:
- The appraiser will not visit the physical property when determining the B.C. assessment. Whereas, when it comes to buying a property, a person will get the experience of the home itself, which can drastically impact the market value.
- There are a lot more factors that an appraiser will take into consideration when determining the market value, rather than the narrow frame of reference that has to be relied upon when determining the B.C. assessment value.
- As we can all attest from experiences this past year, a lot can change in six months. What might have contributed to a property value in July could have changed substantially by January. However, in the instance of market value, you're getting a real-time valuation.
How Much is my House Worth?
While the BC property assessment provides you with an indication of your property value, this is a foundation for the government to assign a tax amount to your property. It can often be the case that two similar properties are assigned different assessment values, and this value doesn't necessarily correlate with your property's market value. If you're looking to get a home appraisal, you need to know that it's not a DIY option; you'll need to rely on industry specialists to assist.
When Would You Get an Appraisal?
A real estate appraiser will be able to give you an accurate indication of your property’s market value, which is useful if you’re:
- Looking to sell your home and want a fair market value;
- Looking to buy a home and want to ensure you’re paying for actual value;
- Looking to have your mortgage re-financed; or
- Looking to insure your property.
Benefits of an appraisal
- If you're looking to buy a home, it's worth having an appraisal include as a contingency for the home inspection. The reason for this is that, should any problems arise, which could theoretically impact the agreed-upon sale price, you're protected if you choose to get out of the sale.
- If you’re looking to sell your home, then an appraisal gives you a realistic indication of your asking price so that you’re going in with misplaced expectations, and your property won’t sit on the market for too long.
- For lenders and financial institutions, an appraisal will ensure the homeowner is not over-borrowing when buying or refinancing a property.
If you have any concerns regarding discrepancies between the B.C. assessment value and the expected market value, then it’s worthwhile consulting with real estate professionals for a full appraisal. More than just giving your home a credible value, they can indicate areas of improvement that could further enhance property value should you wish to sell at a later stage.