Property tax assessments to be frozen
Gordon Campbell has pledged to freeze BC property tax assessments at their 2007 level to ‘help people cope with turbulence in property values’. I’m trying to figure out the motivation for this move, perhaps to people that don’t understand property tax it seems like a relief? Our property tax system is not set up like California, where property tax is dependent on the assessed value. The crashing California real estate market has meant less money flowing into government coffers, leaving cities scrambling to make their budgets work.
In Vancouver your property tax assessment only matters in its relation to your neighbors. Every house price in Vancouver could drop across the board by 50% and the property tax paid by each owner would remain the same. This protects city tax income, but can be tougher on tax payers.
Tax assessments in Vancouver are done in July, which coincidentally was very close to our market peak. Freezing assessments at their 2007 value may help to make it appear house prices haven’t fallen as far as they have if the 2008 assessments are never made public. I don’t believe this is a motivating factor though, since the REBGV benchmark price and average sales price data still paints a more complete picture.
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November 3rd, 2008 at 12:05 pm
1. Give the impression that property values are still rising.
2. Give the impression that property taxes are being capped.
They are going to have to renege on this after the election, when the bust becomes too big to ignore and homeowners will object to assessments greater then the market price of their houses - especially recent purchasers.
The reason they will give: “Property values are now falling so it is no longer necessary to cap assessments”.
November 3rd, 2008 at 12:37 pm
November 3rd, 2008 at 12:47 pm
To inflate/maintain the otherwise sinking property value?
To make people feel better/richer even though market condition has changed for worse?
To maintain steady tax revenue? (but if every house decrease by 10%, should we be paying the same amount of tax based on proportion??)
Someone please shed some light.
November 3rd, 2008 at 12:50 pm
November 3rd, 2008 at 12:58 pm
My own guess is that the 2008 assessment would be higher than the 2007 assessments, but neither is reflective of what is occurring now. QUESTION: Who’s side is Campbell on ? Does a freeze at the 2007 assessments imply he is trying to help the Local Gov’ts insofar as their Mill Rates won’t have to be adjusted too much ? This across -the -board “frezze” move implies that each Local Gov’t will have to adjust accordingly to their own circumstances ie their own individual Mill Rates .
Maybe Campbell is giving Local Gov’ts a head ups so there is more certainty for them. Finally, Campbell’s assessment freeze would effectively cancel any Assessment appeals, would it not?
November 3rd, 2008 at 1:01 pm
They felt as if the government had independently assessed their house and that was the true price.
It’s also used in negotiations as a starting point…
I guess that Gordo thought it would help with voters’ psychological view of the economy.
My best guess is that we won’t really see the drop in house prices we are all expecting until people start losing their jobs.
From my own past experience, it all starts with company pay/hiring freezes, and moves onto 5-10% targeted RIF (reduction in force) cuts about 3-4 months after the freezes.
November 3rd, 2008 at 2:16 pm
What a cash grab that thing is.
November 3rd, 2008 at 2:49 pm
Precisely why they won’t get rid of it.
November 3rd, 2008 at 3:00 pm
November 3rd, 2008 at 3:07 pm
Well, Campbell must be crapping right now. The PTT was a major source of revenue during the bubble’s rise , and in the current economic climate (ie bubble has popped )Provincial revenue must be down big time. Of all the gouging taxes, this “PTT ” one puts affordability of housing that much further out of reach. Just because they can create such a tax does NOT mean they should.
November 3rd, 2008 at 3:34 pm
November 3rd, 2008 at 3:56 pm
What a cash grab that thing is.
A cash grab when properties are changing hands, but since sales started to plummet its not such a cash cow anymore.
November 3rd, 2008 at 4:19 pm
I don’t foresee an economic turnaround in the short term, so everything Campbell does has to have some short -term stop gap strategy behind it. A lot of “peace” was bought and paid for (ie Civil Service, First Nations,etc. ) so the Olympics would run smoothly, but that was based on previous projection model/s. The more major results of an economic downturn may be simmering and manifesting themselves as we speak, and the perfect storm that may result may create a lot of societal upheaval which could occur between now and the 2010 Olympics. ( Ya’ll remember the BC “Solidarity protests” of the early 1980’s ?)
IMO, Campbell is simply buying time and a lot of duct tape given he has very little wriggle room fiscally and chronologically . The problem may be that he and Local Gov’ts may pull even dumber desperation- based moves in order to save face when the world shows up in 2010 .
Watch out !
November 3rd, 2008 at 4:56 pm
http://www.bcbusinessonline.ca.....page=0%2C0
November 3rd, 2008 at 4:56 pm
.
G = 6.67428E-11 m^3kg^-1sec^-2
.
and
.
g = Gm/r^2
.
where m is the mass of the planet and r is the radius at whatever point we want to know gravity.
.
Let’s just make things simple and use the earth’s mean radius of 6,371,000 m and mass of 5.9736E24 kg.
.
g = 6.67428E-11*5.9736E24/(6371000^2) = approx 9.8 m/sec^2
.
Sorry, couldn’t resist.
November 3rd, 2008 at 5:16 pm
To determine G forces ,and force of impact, observe your stock broker or realtor flying past your office window . Assume negligible air resistance and regardless of cost of suit.
—Assume Blackberry is part of overall mass and
—that terminal velocity is not reached (unless leap is made from 60+ storey Shangri -La )
November 3rd, 2008 at 6:07 pm
Vancouver Sun: Home Equity takes a huge hit.
http://www.canada.com/vancouve.....2965a60a74
November 3rd, 2008 at 6:18 pm
Great opportunity in Point Grey to get into an entry level home with basement suite. This home has been cared for and maintained; however some cosmetic updates could be done. Nice sunny south backyard in super quiet location! This home is priced to sell! All serious offers will be looked at, but no subject to sale of offers please
November 3rd, 2008 at 6:26 pm
November 3rd, 2008 at 7:04 pm
What does this mean?
November 3rd, 2008 at 7:16 pm
I suspect the assessment of 2008 values would be much more controversial than usual as it is so near inflection point in market prices. Near July 1, 2008 there were relatively few units selling. I imagine most sales were near peak price. However, there were likely a few sellers who rushed for the exits (like me) and sold investment properties at a heavy discount.
The majority of owners aren’t trying to sell. Many will notice the few lower priced sales. There could be a lot of reassessment requests and misdirected anger. I tend to agree that relative valuations won’t be as easy to determine from 2008 sales as 2007 sales.
In the case of Vancouver, the values are averaged over 3 years anyway so I don’t think the decision is valid. The assessment on my primary residence spiked irrationally high in 2007 (relative to neighboring homes) and that will now carry through to 2008. I wish I had protested then.
November 3rd, 2008 at 7:24 pm
Benchmark price of detached house drops 9.9 per cent since last May”
Re-diculous SaysHere we go
Vancouver Sun: Home Equity takes a huge hit.
http://www.canada.com/vancouve…..2965a60a74
As per RE-diculous’s Link:
Note the article quotes several pimps, which should reported to Maggie.
I appears from the article the pimps were not wearing their happy smiles.
Maggie will have to spank them.
November 3rd, 2008 at 7:27 pm
November 3rd, 2008 at 7:35 pm
if its sent to this blog and others its bound to get posted
if sent to garths site he will usually post it at the top..
should help
greaterfool.ca
November 3rd, 2008 at 7:35 pm
I think he was trying to get a tax freeze on property taxes for pre-election brownie points but going about it the wrong way.
November 3rd, 2008 at 7:36 pm
November 3rd, 2008 at 7:36 pm
http://www.greaterfool.ca/2008...../#comments
November 3rd, 2008 at 8:09 pm
Of course what he’s ignoring is that listings are 77% higher than last year and while housing starts may have recently declined they were very strong in the first 8 months of the year.
November 3rd, 2008 at 8:32 pm
Down 4.2% in one month….and we’re just getting warmed up!
November 3rd, 2008 at 8:59 pm
Wrong. As we have said before, RE sells for the highest price a buyer is willing and able to pay. If I am willing and able to pay, say, 500K, I will pay that amount whether or not it includes PTT. The cost of PTT is borne by the seller.
My best guess is that we won’t really see the drop in house prices we are all expecting until people start losing their jobs.
House prices are already dropping faster than we had expected.
“no subject to sale of offers please”
What does this mean?
Seller wants the money RFN.
November 3rd, 2008 at 9:25 pm
http://vancouver.ca/corpsvcs/treasury/faq.htm
In 2008 if your house is assessed over 1,050,000, you starting loosing your Home Owner Grant ($845). I don’t know how they come up with that 1.05M number (It rose by 10.5% in 07/08 and 21.7% in 06/07) . If they aren’t tied to last years assessments and that number rises, it’s a discount for those “rich side of median”.
It’s also worth pointing out that real estate doesn’t rise (or fall) uniformly. For those people in the spectrum building (I’m sure their assessed value has come down more than most), this will be another stick in the eye.
November 3rd, 2008 at 9:50 pm
November 3rd, 2008 at 9:53 pm
November 3rd, 2008 at 10:44 pm
Re Post # 30
Please link to where the seller pays the PTT ?
……Or are you implying the Seller takes the hit which is inclusive from the Purchaser’s offer ?
The tax is 1 % of the first $200,000 and 2 % of the remaining amount. Unless one qualifes for the PTT exemptions, it is still a substantial amount.
On $ 500,000
1 % of $ 200,000 is $ 2000
2 % of $ 300,000 is $ 6000
PTT is $ 8000
That $ 8000 tax on top of $500,000 means $ 8000 less for the offer bid or other things.
November 3rd, 2008 at 11:00 pm
http://housingpanic.blogspot.c.....html#links
i dont normally paste articles..but this one seems fitting
its a response to the above post
Paul E. Math said…
“Realtors, you represented yourselves as trustworthy experts in real estate. You were not. If you were an expert in real estate you would have known that prices were out of line with rents and incomes, that we were in a bubble, and you would have warned clients against buying property.
You called yourselves ‘agents’ which is a technical term that entails that you must put the clients interests above your own. You did not. You talked people into buying homes that they could not afford, that were destined to drop in value so that you could obtain a commission cheque.
You preyed upon the ignorance and vulnerability of your clients. You told them they needed to buy now or be priced out of the market forever. This was a self-serving lie.
You financially supported your state and national associations of realtors who, in a position of respect, trust and authority, not only denied the bubble, but ridiculed and fought those seeking to impartially educate consumers.
Your state and national associations of Realtors lobbied all levels of government heavily, relentlessly and successfully for self-serving policies that inflated the price of real estate, contrary to the interests of their clients, so that their members could reap higher commissions.
You engaged in collusive, anti-competitive practices, jealously guarding the multiple listing service, forcing buyers and sellers to use your members, paying them extortionate fees.
You lied and were one of the chief beneficiaries of rising home prices.
This is just the short list of what Realtors did to cause this to happen. You should be ashamed and apologetic and, if anyone, you should be paying for the foreclosures, not the innocent taxpayer.”
November 03, 2008 8:55 PM
November 3rd, 2008 at 11:25 pm
Correct. If the buyer is willing and able to pay X dollars for a house, he will pay X dollars inclusive of PTT. The seller will get X - PTT. If there were no PTT, the seller would get X.
If you really want a blunt example, imagine that PTT was increased to 100%. Would people be paying 100% more inclusive of PTT? Of course not, because they are already paying all they can. Sellers would have to drop prices 50%.
This differs BTW from sales taxes on consumables the burden of which is split between buyer and seller, because asset pricing is completely different from consumable pricing.
November 4th, 2008 at 2:03 am
We will not consider offers that include the condition that you sell your own house first.
November 4th, 2008 at 8:51 am
Re “Housingpanic blog”
That is an awesome link:
Thanks !
I love the post by the guy named ” Anonymous” (posted NOV. 3 ) and his Florida Real Estate experiences.
He stated that a lot he bought for $1,500 ended up with an asking price of $60,000 in a few short years . A frenzy then a collapse.
Lots of other good comments.
Recommended read for anyone that hasn’t.
November 4th, 2008 at 9:34 am
“We know that property values have fluctuated widely since assessments were conducted last July,” said Premier Campbell. “To avoid confusion, anxiety and unnecessary assessment appeals prompted by higher-assessed property values that do not reflect current market conditions, we will lock-in B.C.’s assessment rolls at 2007 assessed levels.”
It’s largely a symbolic move, but at a practical level they are avoiding a January storm of angry ho-moaners thinking they are being over-taxed because their assessed value is 200K more than their neighbour just sold his similar house for (after 9 months on the market and multiple price drops).
November 4th, 2008 at 9:57 am
The freeze means this: condo owners (whose properties have dropped in value and should pay less taxes) will subsidize high end home owners (whose properties have either retained or increased their value, thus without the freeze, they would pay higher taxes).
Capmbell’s decision favours posh residential areas at the detriment of low end condos and townhouses whose value is dropping like a stone. This freeze makes a regressive tax even more regressive.
Last year, barely a week after the property assessments came out, Campbell announced that the Home Owner grant threshold would be raised from $750,000 to $950,000. The wealthy never skip a beat when it comes to protecting themselves and shifting taxes to the masses.
timeforcities.ca
November 4th, 2008 at 10:31 am
However,dissecting this matter in a “legal” sense, does the assessment freeze deny you a right to appeal, given normally you have till about Jan. 31 (approx. 30 days from the time you get your assessment)to file an appeal.
If Campbell has frozen the upcoming assessment to 2007 levels, then “de facto” , does this imply there is no grounds for appeal,as you have “technically” missed the 2007 deadline , hence the 2007 assessment is now a given, or why else is it frozen ?
Campbell should be more up front as to WTF his REAL intent is, versus leaving it so gray and hanging . Are we still allowed to “appeal” our so-called new = frozen assessment or not???…as in my view an “appeal” is an inherent right in most legal and quasi-judicial venues.
November 4th, 2008 at 10:35 am
Would love some clarification from the Gov on this though.
November 4th, 2008 at 11:36 am
When you Local Gov’t has a data base of all final assessments ( ie all appeals are exhausted and any/all final adjustments made ), it will decide on a Mill Rate.
However, what I also found out is that a Local Gov’t will also look at a demarcation point re % increases/decreases of property assessments. Certain areas and certain types of properties may have enjoyed gains in assessed value while others may have experience drops or lesser gains in assessed value (ie it is not always an across -the -board type of equality.
If your property experiences a certain benchmark drop in assessed value, say X %, this may be taken into account in your property taxes. If your properties drop in value is at or below ” X % “, the Local Gov’t may shift more the tax burden to those whose assessment drop was LESS than X % .
BTW: I found this out via an inquiry at our City Hall on a related matter. I presume this is an attempt to be fair given such pockets of assessment anomalies can and do occur.
That is another reason assessment appeals can be valuable. If your Local Gov’t has the same methodology, your appeal may ultimately place you into a lower taxation bracket.
November 4th, 2008 at 3:12 pm
November 4th, 2008 at 3:54 pm
The Appeal board is a bunch of appointees that by and large will not contradict the BC Assessment assessors opinions, so the onus is on you to submit a good case.
Yes,I have won in the past , but it takes a lot of time and effort.
However, if you Local Gov’t has a GIS system , it makes the research for your assessment appeal case a lot easier.