Fundamentals of municipal assessment

The increase in your last property valuation notice may have surprised you. Q: Will your municipal and school tax returns follow the same trend?

“The short answer is no,” says Danielle Pilette, assistant professor of strategy, social and environmental responsibility at the University of Quebec-Montreal (UQAM).

This is confirmed by the city of Montreal: real estate values ​​have increased by an average of 32.4%, but the increase in applicable taxes in 2023 will be from 3 to 6%. “An increase in the value of your property does not automatically result in an equivalent increase in your municipal or school tax,” the administration’s website says.

Set property value

According to the Municipal Taxation Act, valuation is the responsibility of the municipal authorities, whether they are large cities, agglomerations (such as Montreal, Longueuil, etc.) or regional municipalities of the district (MRC). “For each municipality in the respective territory, the responsible municipal authority draws up a list of assessments, which is compiled by an assessor every three years,” says Daniel Pilett. Thus, the valuation sheet is produced every three years and serves as the basis for municipal taxation for three consecutive financial years, although it may be subject to change in relation to value added associated, for example, with new construction. »

The appraisal sheet allows you to make an inventory of all buildings located on the territory, and indicate the value of each property at its real or market value. This list forms the so-called “tax base” of the city or municipality. It serves as the basis for establishing municipal and school taxes in force in the municipality.

Obviously, your property taxes are derived from the tax bill, which itself depends on the state of the property market in your part of the country at a given time.

Take the example of Saint-Hyacinthe: the last three-year valuation sheet, filed in September 2021, went into effect on January 1, 2022. The value of buildings and land was set in accordance with market conditions prevailing on January 1, 2022. July 2020 i.e. almost 15 months before the establishment of the list. The values ​​determined in July 2020 served as the basis for calculating municipal taxes for the next three years, i.e. 2022, 2023 and 2024.

In Montreal, property values ​​were set on July 1, 2021. The most recent role was filed in September 2022 and will serve as the basis for setting municipal taxes for the next three years (2023 to 2025).

Impact on tax bills

On average, the growth of tax deductions ranges from 2 to 3% per year. The sharp rise in home values ​​over the past decade has not led to a dramatic increase in property taxes. “There is no direct consequence,” says Ms. Pilett.

Instead, cities even lowered their tax rates. This is calculated according to the cost x of the $100 municipal appraisal. In Montreal, for example, the rate is already set at $1.25 per $100, while it is currently hovering around $1. But, since this applies to buildings and land, the value of which rises sharply, the total amount of municipal taxes is actually higher.

How to estimate the cost of housing?

To establish the value of a property, the appraiser takes into account market conditions and factors such as location, area of ​​land, size of the residence and buildings, age of the property, quality of construction, and income from the building, if any. The law also provides that in order to adjust the value of a house, the main changes made to the house must be indicated.

The law also obliges the owner to visit his place of residence with an appraiser, if the latter so requests, in order to be able to update the file. The law provides for inspection of buildings every nine years.

Challenge his assessment

You can dispute your municipal valuation if, for example, you disagree with the valuation of your home, or if the information on the valuation list is incorrect.

Review requests must be made within a certain time period in connection with your city or municipality’s role submission. The procedure is not free. It is listed in the notification you received.

In Montreal, for example, the deadline to contest your notice is April 30, 2023 for the 2023-2025 registry, and fees range from $75 to $1,050 depending on the value of the property.

In the meantime, new owners of an existing residence must wait for the next list to request a review, although there are certain exceptions. In the event of a dispute, the Administrative Tribunal of Quebec decides. This can be done in person, by mail, or by email, but first you must fill out a form available on the city or municipality website.

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