Well, a new year and new property assessments are out in Calgary. If you're a homeowner, you may (or may not have) received your property tax assessment in the mail, but you can check online HERE (you'll need to verify you're not a robot to access). These assessments are based on the physical condition of the home on December 31, 2024 but the estimates value on July 1, 2024... more on this below.
Those of you who own homes will likely see a material increase in property assessments this year - an overall increase of 15% since last year for residential properties across our city (+3% in commercial values, Chinook Mall taking the lead as the highest non-residential property at >$1 billion).
So, what does this actually mean?
Based on to City of Calgary website: "the assessed value (market value) is the value determined by the collective actions of the market. A single sale does not determine market value. Properties are assessed using mass appraisal, which means that The City reviews multiple sales to determine an estimate of market value...Property Assessment is the determination of value for a property for taxation purposes." = in short, all for the purpose of the City's budgetary requirements for the upcoming year.
Key point: property tax assessments are completely different than how much a buyer is willing to pay for that property (fair market value), in today's market.
Yes, the City uses market information to help guide their assessment, but it's also driven by how much tax they require for their budgets. Unfortunately, it looks like it's been year-over-year increases in property tax (+5.5% overall tax increase for residential properties). For some people, they could likely expect a much larger tax bill as well (one home owner saw a 60% increase in assessment this year; makes no sense thinking property prices increased by 60%...LINK)
The other lever the city as is what's called the mill rate, which is effectively the tax rate they use on the assessed value to determine the tax chargeable on the property ([$assessed value] x [%mill rate] +/- [adjustments] = property income tax bill).
That said, many people believe property tax assessments have some bearing on market value, but they are two completely different things. Yes, the City uses market data as one tool to determine assessments, but there are many other factors at play.
Here are some other factors used to assess property:
For those of you who are completely new to property tax, here's the assessment cycle to keep in mind:
As you open your mail this month, you might be surprised to find the value of your home increase a material amount, but also know because of that your property tax has also increased.
Separately this week, we've also hear that Calgary now has the fastest declining rental rates in all of Canada, largely driven by increase rental supply and slowing international immigration (SOURCE). If you're an investor, make sure you run your pro-forma figures / sensitivities to understand the impact, and if you're renting, hopefully you're gaining some reprieve (maybe time to re-negotiate with your landlord once your lease is up).