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How Property Taxes are Calculated in B.C.

Around late May or early June, property tax notices typically get sent out to homeowners and property owners in B.C. It is often a time of angst when people open up their property tax bills. But many property owners may not really understand how their property tax amounts get generated.

In British Columbia, property taxes are calculated based on the assessed value of the property and the applicable tax rates. The assessment of a property's value is conducted by the British Columbia Assessment Authority, an independent agency responsible for determining the assessed values of all properties in the province. They use a valuation date of July 1, each year. This figure then appears on assessment notices that get mailed out the following January.

Here are the key steps involved in calculating property taxes in British Columbia:

1. Property Assessment: BC Assessment assesses the value of each property in the province. They consider factors such as location, size, age, condition, and comparable sales in the area. Property assessments are updated every year in the province.

2. Property Classification: Properties in British Columbia are categorized into different classifications, including residential, commercial, industrial, recreational, and others. Each property class has its own tax rate, which is determined by the local government authorities.

3. Tax Rates: Municipalities, regional districts, and other local government authorities set tax rates for each property class within their jurisdiction. These tax rates are expressed in terms of a certain number of dollars per $1,000 of assessed property value.

4. Calculation: To calculate the property tax owed, the assessed value of the property is multiplied by the applicable tax rate. For example, if the assessed value of a residential property is $500,000 and the tax rate is $5 per $1,000 of assessed value, the property tax would be $2,500 ($500,000 / $1,000 * $5).

5. Additional Levies: In some cases, additional levies may apply to the property tax calculation. These can include local improvement charges, school taxes, or other special assessments imposed by the local government.

6. Property Tax Due Date: Property taxes in British Columbia are typically due on a specific date set by the local government authority. Late payment of property taxes may result in penalties or interest charges.

It's important to note that property tax calculations can vary depending on the municipality or regional district in which the property is located. Each local government authority has the flexibility to set its own tax rates and additional levies within the framework established by provincial legislation. Property owners can usually find detailed information about their property taxes on the local government's website or by contacting their municipal or regional district office.

Finally, there are some relief programs to deal with property taxes. I've discussed these in other blog posts. These include:

1) The Homeowners Grant

2) Property Tax Deferment Program

Nobody likes to pay property taxes. However, we need to remember that they do help fund local services like police, firefighters, road maintenance, community centres, parks etc. These are things we all depend on to enjoy a high standard of living and good quality of life.

If you would like a FREE home evaluation, I'd be pleased to provide an opinion of value as of a certain date. This might help you determine if your property has been fairly assessed by BC Assessment. In turn, this will ensure that you are NOT paying more than your fair share in property taxes. Contact me today if you'd like to chat more on this topic.

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The Property Transfer Tax in BC: A Major Closing Cost

An often underestimated or overlooked closing cost on the purchase of real estate in British Columbia (BC) is the Property Transfer Tax. The Property Transfer Tax (PTT) is a significant, additional closing cost when purchasing or acquiring an interest in real property, when registered at the Land Title Office, in BC. The legal professional that you hire to represent you is required to file a property transfer tax return to the BC government. Because property values are now so high in Metro Vancouver and the Fraser Valley, the amount of property transfer tax payable by home buyers can be a large sum.

Unfortunately, the amount of property transfer tax payable is not an amount that can be rolled into one’s financing (i.e. mortgage amount). Liquid funds like cash need to be available to pay up front, upon closing on the acquisition of a home.

Below is an illustration of what the tax amount payable might look like. The table below is for general informational purposes only and you should always consult with a legal or financial professional, to determine the exact amount you might owe in any particular transaction. There are also considerations that might affect the amount payable, including being over a $3M threshold that might trigger additional property transfer tax payable or perhaps you qualify for an exemption.

As can be seen (in mid 2023), for a typical Fraser Valley condo, the property transfer tax can amount to a figure in the mid to high teens. For a typical detached home, you would paying around $25,000 to $38,000! And that is paid with after-tax dollars, for most people.  

The Government of BC has a dedicated webpage about the property transfer tax. There, you can use their handy calculator to estimate taxes payable. As well, the webpage has a link to detailed calculation examples, to help people determine which situations (i.e. exemptions) might apply to them.

As a buyer's agent, I help clients make sense of the property transfer tax and all other steps of the home buying process. Best of all, using me for home buying services is at no cost to you. Contact me today to get started.

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