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cougar

Property Assessment Speculation, overvaluation and overtaxation

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I received a property assess statement last week for a small strata lot I have; well, on paper as I am still paying it off.

They tell me that the value of my lot went up by 54% since last year!!!

What is even more bizarre they tell me the land doubled in value, but with strata lots, the land is actually strata or common property.  The only land in possession is the patch on which the house sits.

Compared the old value of land of my lot with similar size lots to the west, south and east , and even before the increase they recommend for next yer, my land is valued 5 times more than any other similar lot around.  I will get the BC Assessment office on that, I am sure, but the more interesting question to me is this:

WHAT IS VALUE AND DOES THE VALUE OF A HOUSE ACTUALLY INCREASE?

When I phoned the assessment office, they were quick to point out the LNG project starting in Northwest BC as the reason for the increase.   Yes, yes.........but actually no, I would say.

Value is something that I, as a consumer can determine.  If in 2012 I could go to a spot on the river and catch 3 chinook salmon on a fly, I could not even fish for them in 2018 and this year I could not get any either!    If I could go up north and come across only a couple of vehicles, in the past 2 years there have been scores of vehicles, noise and disturbance in the past 2 years.  If in 2015 I could go to Mt Elizabeth and have an enjoyable day, My trip of 2019 can be described as a stressful industrial experience (already documented this one with pictures in another thread).

So the value of my place to me has actually decreased.  When they bring all pipeline workers to double the population, stress, traffic and pollution the value will drop even further.

But the way our corrupt system sees it, one can ask for more money, as there are more people but not enough houses built at this point.    This means , whoever is put between a rock and hard place will either be willing to pay more/month on accommodation or take a mortgage over a longer period of time, for smaller and smaller units.  Not only that, but instead of having one person in a 1 bedroom apartment with the "increase in value", you will see three of 4 people living in the same space.

Of course, if you are not selling, the net effect to you is an increase in property taxes on speculation values and the delight (to the foolish) that they have somehow become richer overnight without the need to do anything more.

Since wages do not double in a single year (mine will not), whoever pays a mortgage will have a greater chunk go towards taxes and less go towards the principle in this way either extending the amortization period or having to pay higher amounts each month.

 

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Don't you pay property taxes separate from your mortgage?  I do, so what I pay towards principle remains the same, regardless of what property taxes do.   My property taxes increased by about 60% year before last. The assessed value of my property has doubled since I bought in 2010.   Good for me, bad for people who want to get into the market.

If properties around your place have lower assessments, I think you'd have a good case for appeal, but I think you have only 30 days or something to file an appeal.

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4 hours ago, dialamah said:

Don't you pay property taxes separate from your mortgage?  I do, so what I pay towards principle remains the same, regardless of what property taxes do.   My property taxes increased by about 60% year before last. The assessed value of my property has doubled since I bought in 2010.   Good for me, bad for people who want to get into the market.

If properties around your place have lower assessments, I think you'd have a good case for appeal, but I think you have only 30 days or something to file an appeal.

No, I pay one sum which has 3 components - property tax, interest and principle.  The interest is locked for 5 years (just renewed), so if I do not pay more each month after a property tax hike, I imagine my amortization period will increase, which also means I will be paying interest on the property tax increase portion.

Again the main question is "What is value and did the VALUE of the old house increase?"

My take is, if I did not renovate the house or put two more floors on top the existing structure, there is no way in hell the value increased by 54% in 1 year!  Same with the land.   You can only grow that many tomatoes per square meter, or have that many people live on it.  The more people you put in, the less the value for each one is, so overall, there is no value increase.

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31 minutes ago, cougar said:

No, I pay one sum which has 3 components - property tax, interest and principle.  The interest is locked for 5 years (just renewed), so if I do not pay more each month after a property tax hike, I imagine my amortization period will increase, which also means I will be paying interest on the property tax increase portion.

Again the main question is "What is value and did the VALUE of the old house increase?"

My take is, if I did not renovate the house or put two more floors on top the existing structure, there is no way in hell the value increased by 54% in 1 year!  Same with the land.   You can only grow that many tomatoes per square meter, or have that many people live on it.  The more people you put in, the less the value for each one is, so overall, there is no value increase.

Increased value is usually assessed on the land, not the improvements.  If you look at this years asseasment vs. last year's, you'll most likely see that the land value increased, but not the structures.  

Value is also determined by other people based on a property's desirability (location, amenities, availability) on the market.  BC assessnent is usually behind the market by a year or two, so for current market value, its best to talk to a real estate agent.

I thought my place was undervalued by the market when I bought it; now I think its overvalued, but we're in the lower mainland so there's lots of desirability, but its still in the lower end of the market.

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21 minutes ago, dialamah said:

Value is also determined by other people based on a property's desirability (location, amenities, availability) on the market. 

My property is not a mansion; it is a townhouse - comfortable for a single family and that is about it.   Value for similar place as well as apartments is on the rise , in my opinion, due to the inability of young families to buy a detached house where the price will be two or three times what they can afford.

It is not that the "value" has increased; it is just that people have been squeezed further into debt and into a tighter corner.

At one point this whole real estate thing will blow up in our faces.

For now, I will press my case with BC assessment and have my increases reversed.

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A rise in assessed values doesn't automatically mean your taxes go up.  My assessment has gone up significantly the last number of years but the mill rate has also gone down.  I can see how politicians will get dollar signs in their eyes as assessments go up but they still have to justify and run new expenditures past homeowners and if they can't the mill rate goes down. Legally they can only collect taxes for what they actually need and unless you've collectively decided you want a new library or community hall or something your taxes should remain the same.

Edited by eyeball

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On 12/24/2019 at 2:21 PM, eyeball said:

A rise in assessed values doesn't automatically mean your taxes go up.

Correct.  I have been paying the same property tax amount over the past 5 years although they managed to raise the value of land 5 times in this period.

But in each statement they say that the assessment value is "one of the factors" property taxes are based on.    Anyways, I am tired of their shenanigans, so I will bring them to explain what exactly they  are trying to do as the valuation they have done makes very little sense.

Don't we pay tax on capital gains on the disposal of a property?  (This is another can of worms, when we have to factor in inflation in the equation)

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1 hour ago, Moonlight Graham said:

I live in a cardboard box in the middle of the boreal forest.  Nobody bothers me.  No property taxes

If the assessment authority in your area notices your improvements, they'll assess property taxes.  :)

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2 hours ago, cougar said:

Don't we pay tax on capital gains on the disposal of a property?  (This is another can of worms, when we have to factor in inflation in the equation)

Not if it's your primary residence.  Only investment properties are subject to capital gains when sold.

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23 hours ago, Moonlight Graham said:

I live in a cardboard box in the middle of the boreal forest.  Nobody bothers me.  No property taxes

And how the heck do you get internet there?

Joking aside, I do not think one can live survival style anywhere anymore.  It will not be long before the loggers show up and ask you to move out, or the miners, or the oil and gas folks.  They fly helicopters left and right over here, on the weekends too, always on the lookout what they can pillage and plunder and sell to China.

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21 hours ago, dialamah said:

Not if it's your primary residence.  Only investment properties are subject to capital gains when sold.

Good to know that.  But the moment one decides to sell,. that means the primary residence has become a secondary residence.  I hope one is allowed to buy a new place before selling the old one, as who would one to live at a hotel in the meantime.

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