Tax Assessments

Do tax assessments really matter?

There are a few things that are important to understand when it comes to tax assessments in Calgary.

Taxes are assessed in July of the previous year. As we all know, a lot can change in a few days let alone 6 months. Especially in real estate.
How the assessment matters to most is based on their objective. The homeowner will have to pay the taxes based on this amount so it will matter a lot if you feel as though you’re paying too much in taxes. If you’re looking to buy or sell real estate, it may matter then as well however you should consider market value instead of the assessed value.

I’m going to discuss an actual home in Mount Royal as we discuss the City of Calgary’s view on home assessments. When the city determines value, they consider property details. The assessors look at your property’s age, location, lot size, whether any additions or improvements have been done in the past year, proximity to greenspace, schools, community services, etc, and other influences such as view and traffic. This Mount Royal property is currently listed for sale but the assessment came in around 50 percent below listing price which is arguably market value. Personally, I trust the real estate agent who has it listed to be more accurate because they’re actually been inside the home.

We pulled every one of our buyers from last year to see how they faired with their assessment. I’m happy to report that it appears that some people may have gotten great deals but there are some that have been left with a lot of questions.

Regardless of how you feel about taxes, they’re needed to keep our city functioning. They are calculated based on the city’s forecast of expenses. Unfortunately, the City of Calgary didn’t seem prepared for tax assessment notices to be released because the link on the website to inquire more wasn’t working when they were first released.

That’s where we can help!

The home in Mount Royal got lucky and their taxes are less than they should be. But market value, city assessed value, insurance, and the bank appraisal value are not the same thing. When it comes to buying or selling a home, market value is what a buyer is willing to pay. There is often emotion involved.  But value is value.

When considering the market value of your home consider these factors:
  • Replacement value. What is the cost to purchase the lot and rebuild the home?
  • Comparative sales. What were others willing to pay for similar homes in the area? This helps put a cost on the location, the views, etc.
  • Seller Motivation. If you’re in a hurry to sell, the value will likely be a little less to rush a sale. Perhaps you’re relocating and don’t want to carry a property after you’ve moved, the value in a quick sale may be more important than the cost of maintaining the property after you’ve moved.
  • Buyer Motivation. The buyer may be willing to pay a premium if they want to be moved and settled in before the school year starts. Or they may have sold their home and possession day is quickly approaching so they need somewhere to go. Factors such as these, that are totally out of the control of the seller, can affect the price someone is willing to pay.

All of these factors, and others not listed, are the key ingredients to the actual saleable value of your home. If you’re selling, don’t worry if it’s too high or too low. It’s up to your real estate team to justify and market the value of the home to potential buyers and it’s likely not worth the time and effort to contest it with the city.

If you truly believe the time and effort are worth the adjustment, reach out to your local real estate professional (or contact us) and they can help!  But make sure you do so within the Customer Review Period!