Property Tax Assessment 101

Property Tax Assessment 101

Property Tax Assessment 101:In Nova Scotia, our property tax assessment notices are issued the third week of January. We all anticipate opening this notice to determine how much our properties have changed in value over the last twelve months! In most regions, market values in Nova Scotia have improved at a more gradual pace when compared with other Provinces. For example, the Canadian Real Estate Association (CREA) recently reported that the average price for residential properties in Nova Scotia during the last several years were virtually unchanged, when comparing November 2008 and November 2009 property values. CREA statistics indicate that the average price in 2008 for a home in Nova Scotia was $239,438 compared to $239,514 in 2009. In British Colombia, the average price in November 2008 was $395,697, which shot up to $482,392- a 21% improvement!

The Property Valuation Service Corporation (PVSC) is a municipally controlled non for profit organization property tax assessment authority. Properties are reassessed each year and utilize a base date two years prior to the calendar date. The base date for the 2010 assessment notice would be January 1, 2008. A market value approach is utilized by PVSC for each and every assessment.

Let’s first consider the definition of Market Value provided by the Appraisal Institute of Canada:

"The most probable price for which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus."

There are three types of assessment categories within Nova Scotia:
1) Residential
2) Commercial
3) Resource

It is common to have split classifications for a property, especially on a commercial orientated property. For example, if a two unit dwelling offers retail space on the main level and a residential unit on the upper floor, the classification would most likely be a combination of residential and commercial. Resource classifications could include: farming, forestry or a community fishing service buildings. There are other properties that are exemplt from property taxes such as Government buildings.

Your property assessment is calculated by mass appraisal techniques. PVSC's large data base records characteristics within each and every property throughout Nova Scotia. Statistical analysis is used and sales are reviewed to capture general trends and features within your local marketplace. One could argue that mass appraisal reports are not as detailed or precise as receiving a single valuation completed by a fee appraiser. Questions do arise such as: what happens if your property does not fit the mass appraisal type of mold? There could be a likelihood that your property may be over assessed.

In theory, your assessment should reflect the current market value, matched with its base date. As previously noted, the base date in Nova Scotia is two year prior to the current year. Fee appraisers complete consultating services and we offen assist homeowners in the assessment appeal process. If you strongly believe that your assessment does not truly reflect the base date value, it is in your best interest to contact an appraiser. After the assessment notice is issued, the property owner has 21 days to file an appeal with PVSC. Once the property owner grants permission to the consultant, the appraiser contacts PVSC authorities and has the ability to work on their behalf to complete further analysis. Next, the appraiser carefully reviews the assessment file to determine if there are grounds for an appeal. It goes without saying; the appraiser should never complete an appeal that has no merit. The final stage is when the appraiser negotiates with the assessor and if that fails, the consultant can attend an appeal board hearing or to abandon the appeal.

One of the largest expenditures for commercial businesses is property taxes. There are a very limited number of firms in Canada that specialize in commercial property tax consultation. One of the most trust authorities in this business is AEC International. This organization has offices from coast to coast in six Canadian cities and has been in this highly specialized business for nearly four decades. Please view their website at:

http://www.aec-international.com/

Finally, I’ve provide a link for tax rates in each municipality throughout Nova Scotia and another link to the official PVSC website.

http://www.gov.ns.ca/snsmr/muns/fin/tax/pdf/nsmuntax2010-11.pdf

http://www.pvsc.ca/index.html