Changes to land assessment averaging approved
Properties with larger assessment increases may get tax relief
Vancouver City Council has approved changes to the land assessment averaging program, which is intended to provide temporary tax relief for owners of properties that have seen a significant increase in property value.
On March 12, Council approved the use of targeted, five-year land assessment averaging for the purpose of calculating property tax for residential (Class 1), light industry (Class 5), and business (Class 6) properties starting with the 2019 tax year.
The effect of the change will be to spread the taxation impact resulting from a large assessment increase over five years, rather than the current three years.
Providing short-term relief to “hot” properties
Vancouver is the only municipality in British Columbia to use land assessment averaging to provide short-term relief to “hot” properties (defined as those that have seen significant year-over-year increases in property values above a threshold set by Council).
Targeted, five-year averaging will only apply to properties where the year-over-year increase in property value is more than 10% above the average increase for the applicable property class.
The amount of tax relief for these “hot” properties is also capped to limit the impact on other taxpayers.
Property Tax Policy Review Commission recommendation
The move from three-year averaging to five-year averaging was recommended by the Property Tax Policy Review Commission and the Province approved the required amendment to the Vancouver Charter.
Once the averaging formula is established by Council, the number of years cannot change for a period of five years. 2019 is the first year the City can shift to five-year averaging.
In addition to approving the staff recommendations in the report, Council also directed City staff to report back on:
- The potential impacts to renters who live in properties where the property owner’s taxes will be adjusted due to targeted land assessment averaging
- The impact of increased land assessments and resulting tax-related impacts on non-profit or charitable organizations renting or leasing space.
Addressing property assessment and taxation issues
Vancouver, like other municipalities, has limited authority and tools to address property assessment and taxation issues.
In the Vancouver market, real estate speculation, the potential for densification and the pace of change has driven up land value significantly and most commercial property owners are passing on the increased cost of rent and property taxes to their tenants through triple net leases. For small businesses in particular, this can be a financial burden that threatens their viability.
The City is participating in an inter-governmental working group with the Province, BC Assessment, and six major Metro Vancouver municipalities to explore targeted measures to address the assessment and taxation impact associated with development potential. Council also directed staff to request the working group consider progressive or graduated property taxes as an option to provide further tax relief.
BC Assessment is responsible for valuation and classification of properties in BC. The City is responsible for determining how much property tax levy is required to help fund the annual budget, and how the tax levy is shared between residential and non-residential property classes. The City does not collect more taxes as a result of rising land assessment values.