BRITISH COLUMBIA – Real estate markets are in a state of transition, with corrections across property asset classes and regions. Despite this, property owners, landlords, property managers and tenants can take proactive steps to minimize their annual operating expenses by focusing on the property tax process.
BC Assessment is legislated to value most properties annually at fair market value with less than 700 staff for for 2,185,000 properties. This is a challenge, especially when markets are correcting, says Tim Down of PacWest Commercial Real Estate Advisors, adding that this leads to errors that are allowed to be corrected during the January review period.
“During times of economic growth, increased property assessment values (cornerstone for local government finances) lead to higher revenue, enabling expanded local government budgets,” Down states. “However, when markets are correcting, local and provincial governments continue to increase property tax rates to maintain or boost revenue.
“Controlling property taxes is a key strategy in minimizing this expense which impacts a property’s net operating income or holding costs. While external market forces influencing property values are beyond an owner or tenant’s control, a proactive management approach with a focus on the accuracy of property assessment valuations is the only way to control this tax.”
Owners and tenants should understand local and provincial property assessment processes, appeal periods, and property tax regulations. A managed appeal process is crucial, as opportunities for initial assessment reviews and administrative remedies are available during the assessment notice period prior to the appeal deadline on January 31st.
Down recommends enlisting the services of a professional property tax consultant with an appraisal background, understanding of property assessment legislation and valuation processes, access to relevant market data and knowledge of current market conditions and property tax regulations.
They also need to understand both market value and how to evaluate if an assessed value is equitable in relation to similar and competing property values in the taxation jurisdiction, as taxpayers have the right to the lower value.
“Property assessment values change annually so a strategic approach to all property tax matters is necessary,” Down points out. “An understanding of the annual property assessment process and appeal deadlines, while engaging the services of a knowledgeable property tax expert who can pre-pare and present compelling evidence, will ensure property taxes are based on a fair and equitable assessment value. Managing the property assessment appeal process is a critical component in ensuring a property’s operating expenses are reasonable for both owners and/or tenants.”