Have you ever watched HGTV’s "Income Property"? Homeowners are thrilled to hear how much their house is worth. However, there’s no such thing as a free lunch – your municipality wants a piece of the pie, too. Your property taxes are based largely on your property assessment value - but what can you do if your house has been unfairly assessed? If you believe your house has been overvalued, here’s how you can appeal your assessment and lower your property taxes.
Is My Property Overvalued?
Before filing an appeal, here are some telltale signs your house may be overvalued.
- Your assessment value is higher than similar properties that recently sold in your neighbourhood
- Neighbours with similar properties are assessed at a lower value
- Your property is situated near a golf course, highway or hydro corridor
Your assessment should represent the price your house could have sold for at the assessment date. Once you’re convinced your property has been overvalued, it’s important to do your homework before filing an appeal.
Review Your Property Assessment Notice
If you’re a homeowner, you should receive your property assessment in the mail. Reading your assessment notice may be about as fun as doing your income taxes, but it’s worth the effort. The first thing you should look at is your home’s new assessment value versus its previous assessment value. Has your property value increased more than the average of your municipality? If so, your property taxes are most likely on the rise. If you’re in an up-and-coming neighbourhood it’s possible your property has appreciated a lot, but it’s also a possibility that your entire neighbourhood has been overvalued. Review your assessment notice in detail – are there any blatant errors? For example, your assessment could indicate your house has three bedrooms when it only has two or that you have a garage when you only have a shed. These errors can lead to a higher assessment value and higher property taxes. Make note of these errors and be sure to notify your municipality.
What is My Assessment Value Based On?
If you’re a homeowner in Ontario, you’ll have to dispute your assessment with Municipal Property Assessment Corp. (MPAC). Before you can dispute your assessment you’ll need to understand your assessment value. According to MPAC there are five major factors for residential homes:
- lot dimensions
- living area
- age of the structure(s), adjusted for any major renovations or additions
- quality of construction
It’s important to keep these factors in mind when filing your appeal.
Similar to when you’re buying or selling a house, comparable properties – or comps – come in handy. For example, if your house is practically identical to your neighbour’s, but has been assessed at $50,000 more, this will most likely help your case. You should request a list of comparable properties used in your property assessment. If you find all the houses are overvalued, it’s worthwhile to ask your real estate agent for some help. If you can get him or her to provide a list of nearby houses and their selling prices, it will help if your assessment is a lot higher. If you recently purchased your house it’s a good idea to include your home appraisal – it already contains a list of comparable properties.
Filing Your Appeal
Depending on where you live, filing an appeal can be as simple as filing out a form. For example, in Ontario you’ll need to complete a Request for Reconsideration form. In other provinces like British Columbia., you’ll have to present your case in front of the tribunal right away. It’s important to be prepared if you want to win your appeal. Have all your research on hand and well documented. It’s hard to argue with numbers – if houses on your street have recently sold for substantially less, you should have a good case. Who wants to overpay for property taxes when you could put that money to good use, like paying off your mortgage sooner?