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Calgary Taxes: Assessed Value vs. Market Value

Posted by Kirby Cox on Wednesday, January 15th, 2020 at 7:11pm.

Yay, The Taxman Cometh. . .

It can be very confusing determining the difference between the terms “assessed value” and “market value” when either buying or selling a home. Assessed value is often much less than market value, so buyers would prefer the assessed value while sellers would much rather sell at the market value of the home. It is because of this discrepancy that assessed values are not very reliable when calculating true Real Estate values. Let me explain further.

Market Value

Simply put, the market value is how much your home is worth on the market today. The market value is usually what the home will sell for and is typically the price used when calculating a listing price for the property. True market value is ultimately the amount a buyer is willing to pay and a seller is willing to sell for at a given point in time.

Assessed Value

Assessed value of a property is not necessarily what the home will sell for, but rather the rate at which it will be taxed. In Calgary, it is calculated as of July 1st of the year prior. Assessors look at many factors, including your property's details and sales of properties similar to yours that sold in your neighbourhood in the preceding three years.

When considering property details, assessors look at your property's age, location, lot size, whether any additions or improvements have been done in the past year, proximity to greenspace, schools, community services, etc., and other influences such as view and traffic.

You can view and manage your assessment details, calculate your tax, and compare with other properties and/or businesses on the Calgary Assessment website.

When You Disagree…

First of all, you cannot challenge the actual taxes themselves as the City applies the same tax rate to every property. Meaning that if your home is valued higher, then your property taxes are going to be higher as well. Of course, the City of Calgary doesn’t tell you what the tax rate is going to be until several months after all appeals come to an end. The rationale behind this is to guarantee the City the set budget by figuring out what properties are going to be valued at and basing the current tax rate on this figure.

Next you have to ask yourself if it is worth your time to challenge the assessment. It can take quite a bit of time and effort to research and put together an appeal.  Plus there is no guarantee you will have your assessment reduced and in some cases the assessments can actually go up.  So unless the potential savings are significant, you want to think long and hard before contesting.

Once you have decided to proceed, you need to review your assessment for factual errors. If you can spot a problem - it claims that your basement is finished when it is not or you have a garage when you do not, then you are going to be successful.

Review comparable properties used by the City to create your assessed value. The more unique your property is the better chances you have of winning your case. If you live in a neighbourhood where “cookie-cutter” homes are all over and yours is similar to them, then chances are pretty good the assessment is reasonably accurate.

If you think that the comparable properties used by City are superior to your home, we are happy to provide you with research on what the property should have sold for within three months of when the property values were calculated. You must be able to build your case by providing at least three good comparable properties that have sold for a minimum of 3-5% less than what your assessed value is or identify a difference of features worth 3-5% of your assessed value.

A Note for Buyers

Don’t place too much value in Assessed value when purchasing a home. Often buyers will use City assessment to justify low-balling a property. The only thing assessed value is good for, is helping to determine your taxes for the following year. Let’s face it, given the opportunity to pay less taxes, most homeowners will not be notifying the City when their assessments are too low.

We Can Help

While we won't put together your appeal or appear on your behalf, we're more that happy to provide information on comparable sales in your neighbourhood that took place around July 1st last year. Also, if you are thinking of selling, but discouraged by the valuation on your property assessment, don't hesitate to contact us, you might be pleasantly surprised at the true value of your home!

 

Kirby Cox

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