When most of us plan to be lounging around at the cottage this summer, Nelson Karpa expects to be hard at work. In June, Winnipeg homeowners will begin receiving their property assessments in the mail—the first in two years—which means the director of assessment and taxation for the City of Winnipeg will be fielding calls from angry residents who think their property has been overvalued.
Every time an assessment is sent out, a few thousand people attempt to fight the results. Why? The lower a home’s assessed value, the lower the property tax.
There’s no mechanism to fight the property tax bill itself. It’s up to you to prove that your home’s assessment is too high. It’s a fairly easy process, but it’s not so simple to win.
It’s up to the taxpayer to show that their house has been valued incorrectly, says Karpa. To do that, you’d need to present evidence that your home would sell for less than what the city appraiser thinks its worth. “Ask yourself, would you believe that the property would have sold for the amount on the assessment? That’s the starting point,” explains Karpa.
There’s no fancy trick to assessment—city appraisers look at MLS sales data to determine property values. They don’t have time to look at every individual house, though, so they do what’s called a “mass appraisal” and assign a comparable value to similar homes in a specific area.
While mass appraisals are efficient tool for appraisers, they’re not perfect. Neil Gold, an accredited appraiser and director at Montreal-based Altus Group, says that over the years assessors have gotten better, but “everyone makes mistakes.” As soon you get an assessment, look at it and make sure the value actually represents what homes in your area are selling for.
It’s also important to double check that the details on the appraisal are correct, such as dwelling type, adds Karpa. If the assessment says you’re living in a condo when you’re actually in a bungalow, there’s a chance the value is wrong.
The key to getting an assessment lowered is to look at homes selling in the area that are similar to yours. If your place is a 1950s bungalow with three bedrooms and two bathrooms, you need to find another house of exactly the same model to compare it to.
Just as the city assessor does, look at MLS data to compare sales prices. You also want to detail any repairs that need to be made to the house. If your place is in rough shape, you could argue that it’s worth less than similar homes in the area.
Both Gold and Karpa also point out that the comparison has to be made as of the reference date, which is the date that the city assesses property values. In Winnipeg, 2012 property taxes are based on assessments made on April 1, 2010. In Montreal, where the city assesses properties every three years, the reference date is July 1, 2009. “If your contesting an assessment don’t come in with sales figures from 1962 or a year past the reference date,” says Gold.
The process to fight an assessment varies on the province, but usually some sort of court-like process takes place where you have to prove your case. There’s also an appeal process if you don’t like the result. The entire course of action could take anywhere from a few months to a year, or more in some cases. It’s also possible that the adjudicator will find that your property should have been assessed a higher value, which means you’ll end up paying more tax.
Gold says it’s only worth going through this process if you think your home’s value is at least 5% lower than what it was assessed at. “If you think your place might be overvalued by one half of 1% then forget it,” he says, adding it’s not worth the headache.
Canadians also can’t fight an assessment indefinitely. It varies by province, but usually you have anywhere from a month to six months after you have received your notice of assessment, or your tax bill (again, depending on locale), to file an objection. That means if property values drop before the next reference date—as some experts think they might—you can’t all of the sudden say you want your value reassessed so you can pay lower taxes. It doesn’t work that way.
While anyone can try to get his or her assessments lowered, it is difficult to be successful. Karpa says that after the last assessment two years ago about 4,000 people in Winnipeg objected, but in the end the original value of the city’s overall assessment only changed by 1.2%.
If you do want to appeal, make sure you’ve got a case. “Don’t just say I want to pay lower taxes or my neighbour’s house was assessed at $50,000 less,” says Karpa. “Explain why.”