The assessment of a modest house in a neighbourhood of larger more luxurious homes may reflect the land’s potential to support a bigger house.,
Photograph by: Mark van Manen , Vancouver Sun
A little-known provision of the British Columbia Assessment Act could become a bigger factor in protecting single-family homeowners from the effect of rising property assessments in Vancouver’s high-priced market, a prominent appraiser and tax agent argues.
Section 19.8 is designed to protect long-term homeowners in a neighbourhood from land-use changes, such as rezoning or subdividing. These changes can drive up property values by assessing a property based on potential for redevelopment rather than its actual use.
“As we densify core locations (in Vancouver) and put in place policies to allow higher densities, the importance of (Section 19.8) is going to increase,” said Paul Sullivan, an appraiser and tax agent with the firm Burgess, Cawley, Sullivan & Associates Ltd.
Homeowners have until Jan. 31 to appeal their assessments, and in a year like 2016, with thousands of Metro Vancouver single-family homeowners feeling assessment shock from increases of more than 30 per cent, appeals may also increase.
“In a year when assessments have increased significantly more than in previous years, I suspect there will be more appeals,” Sullivan said.
Only a tiny fraction of owners appeal assessments, said Jason Grant, B.C. Assessment’s regional assessor for greater Vancouver, which has more than 200,000.
Sullivan said homeowners also have another option to take the immediate shock out of their property tax bills, if they qualify. They can defer paying property taxes if they meet certain criteria under a program the province offers. It is essentially a low-interest loan, which can be repaid at any time.
The Section 19.8 provisions apply to only a small number of properties. Under B.C. Assessment’s count, only 448 homes in the city of Vancouver qualify for relief under the provision, and “it really doesn’t apply in very many situations,” said Grant.
An example, Grant said, would be the only house on a street that is re-zoned for a 10-storey apartment building.
Other qualifying examples, published on the B.C. Assessment website, include single houses on lots capable of being subdivided or on land that is rezoned for commercial purposes.
Grant said assessors make an effort to identify additional properties that might qualify and contact the owners to let them know they might want to appeal their assessments under the provision.
“Those kinds of situations don’t happen very often, so I’m not surprised (the number receiving the relief) is only 448,” Grant said.
Homeowners have the same Jan. 31 deadline to appeal for consideration under Section 19.8.
“Last year, we only received appeals on one per cent of properties, period,” Grant said. “I would say it is very uncommon for (the provision) to be appealed.”
However, Sullivan predicts that some homeowners will start testing the definition of “existing use” under the Section 19.8 provision in places where modest, older homes are being replaced with multi-million-dollar mansions.
His argument is that the homeowner’s modest house represents a lower-value existing use compared with the lot’s potential to support a 10,000-square-foot mansion, even though there is no other change to zoning.
“That’s what I’d try to persuade a court,” Sullivan said.
Assessments are important to homeowners because municipalities use them to set property tax rates. While municipalities adjust rates to account for rising values, assessment increases beyond the average for a municipality set homeowners up to absorb a bigger proportion of the tax burden.
Homeowners in hot markets, where buyers have bid up prices on modest housing, risk losing the $570 provincial homeowners grant, which was designed as a small amount of tax relief to cushion residents from dramatically rising values.
The province on Monday announced an increase to the threshold for starting to phase out the grant to $1.2 million from $1.1 million in 2015, with the cutoff for receiving no grant assistance rising to $1.35 million from $1.25 million.
The new thresholds ensure 91 per cent of B.C. homeowners will receive the grant. However, as recently as two years ago the province had set a threshold under which 95 per cent of homeowners were eligible for the assistance.
In Metro Vancouver, that leaves almost 26,000 homeowners over the threshold to start losing the grant, according to calculations made by the property information firm Landcor Data Corp. Without the recent change, about 52,000 were in line to lose the assistance.
How to launch an appeal of your property assessment
Review your assessment: Determine if the informations is correct and whether the assessment represents fair value. Check against the information BC Assessment provides online about your neighbours and recent property sales.
Call BC Assessment: Based on comparisons, if you believe your assessment is out of line, ask to talk to an appraiser to review your file and correct any errors.
Request a review: If your discussion with the appraiser doesn’t answer your concerns, you can ask for a review by the Property Assessment Review Panel by submitting a written request spelling out the details of your property assessment and reasons for requesting the review.
For a request under Section 19.8
• The property in question must be less than 2.03 acres.
• It must be the owner's principal residence, where they have lived for at least 10 years.
• The land must have potential for redevelopment that puts its market value higher than its existing residential value.
The deadline for all residential appeals is Jan. 31
Source: BC Assessment
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