Your lower tax assessment--don't panic!

Note: Written in the spring of 2010. The points made apply to other years, whether assessments rise or fall. -Gerald

Just because the tax assessment on your condominium home may have dropped 20 or 30% for 2010 from 2009 doesn't mean that its market value is that much lower this spring. As well, of course, it also doesn't mean that your property tax bill will drop by a proportional 20 or 30%, although I would be pleased if it did. Let's look at true market values first, and then explore the tax implications of your lower property assessment.

While the assessment of your condo property for the 2010 municipal tax year tries to peg its value as of July 1 of 2009, the market has not, in fact, changed as much as was feared on that date, when a replay of the "dirty thirties" was still a world-wide fear. Canada has fared better than most nations struggling with the recession that hit in mid-2008, and our country's housing market has been remarkably stable compared to the United States. Yes, Calgary home values have come off the peak they hit early in 2008, but no, they're largely not at the levels indicated by the City's tax assessment notices.

If you need to sell a condo apartment or townhouse home this year, a condo-specialist Realtor will give you an estimated market value based on comparable sales in recent months and competing properties in your neighbourhood. In most cases I'm finding that true values and actual sale prices are higher than the current tax assessments, so don't despair over the City's 2010 assessments, which date back almost a year to when the market was depressed and our moods were worse.

As to what your 2010 property tax bill might be, consider this: if the value of all properties in the city were to drop 50%, then the city's tax rate per dollar of value ("mil rate") would be increased a similar amount to yield the same number of dollars as last year. The important factor for the individual property owner is how much your property value has changed in comparison with all other properties in the city. If the average drop in value was 20% and your property dropped 30%, then you're in for a lower tax bill. If your property dropped only 10%, then you're in for a higher tax bill.

The City's property assessment notices carry a calculation for each property, showing the "revenue neutral" tax rate that would be applied to all properties in the city if Council holds the line and requires exactly the same total tax revenue as in 2009 (not likely!). That mil rate is multiplied by your new assessment and yields a dollar amount that you can compare to last year's tax bill. My observation is that inner-city condo properties have been adjusted downward more than the city-wide average, rolling back some of the dramatic inner-city value increases that city assessors perceived while the economy boomed.

As an example, my own two-level condo apartment home in the Beltline neighbourhood is worth less than it was at the peak of the market, but not as much less as the City's tax assessment suggests. As well, the suite's assessment dropped more than other properties city wide, so my tax bill should fall while most house owners will pay the same as in 2009 and an increment more because we know the City will need more money this year than last.

While some are panicking over their lower 2010 tax assessments, I'm pleased enough that I and many condo homeowners will be enjoying some amount of property tax rollback, while knowing that if we need to sell, we'll be confident that the actual market should deliver more than the somewhat shockingly low value indicated on our 2010 assessment notice.