If you believe your property’s municipal assessment is unfair, you can contest it by applying for an administrative review of the municipal assessment roll.
It’s important to know that, contrary to a proper inspection, the municipal assessor doesn’t visit each property. To issue an assessment, the assessor relies on statistical data, the sale prices of comparable properties in the neighbourhood, and cadastral information.
The resulting value may not reflect reality; a review could correct the discrepancy.
A Potentially Lower Municipal Tax Bill
First, it’s important to mention that an increase in your property’s value won’t automatically result in you having to pay higher municipal taxes. There’s therefore no need for alarm.
When an assessment error negatively impacts a property owner, it’s because the assessment creates a disparity between the property in question and other comparable homes. Consequently, the municipal assessment may be lowered following a review and thus shrink the property owner’s share in the tax base compared to other taxpayers.
If this is your case, you will end up paying less municipal taxes (again, compared to others).
For example, cutting $50,000 from your assessment may mean several hundreds of dollars in savings per year, depending on your municipality’s current taxation rate.
A Double-Edge Sword
However, be aware that the results may not be what you expected.
In fact, during the review, the assessor could conclude that your property’s value is even higher than that initially determined and adjust the amount accordingly.
Common Reasons to Request a Review
A property owner can request a review to lower the municipal assessment if, for example,
- the form listing the property’s characteristics contains a mistake (living space, number of rooms, etc.);
- the property has been valued far above other similar surrounding properties;
- major defects haven’t been considered (damaged foundations, contaminated lot, awkward right-of-way);
- permanent nuisances, such as noise pollution or soil contamination, haven’t been considered.
The Process
The rules governing assessment roll reviews vary between municipalities. You have to find out your particular municipality’s conditions.
However, as soon as you receive the new notice, you generally have until April 30 of the following year to submit a review application. Remember that a new property assessment roll is published every three years.
Carrying out a review isn’t typically free. For example, in the City of Québec, fees depend on the value: from $86 to $1,149. But the property owner’s efforts may be rewarded if the review is justified.
You can usually submit a review application online or by registered mail. If your request is deemed valid, an assessor will visit your residence to conduct a new evaluation.
How It Could Affect the Resale Value
An increase or decrease of your property’s municipal assessment won’t necessarily affect its real market value should you decide to sell.
By contrast, an overly low assessment may work against you when you put it on the market.
Indeed, some buyers consult the assessment roll to determine if the asking price is fair. Too great a disparity between the municipal and market value can raise questions or give the impression that the home is overvalued on the market, even if this isn’t true.
Your real estate broker will be able to provide all necessary explanations to reassure potential buyers.
Is It Worth the Time and Effort?
Disputing a municipal property assessment may prove advantageous if the amount you wish to contest is significant. But if the property has only been overvalued by a few thousand dollars, the review process is perhaps not worth the time and effort involved.
If you’re unsure, invest the necessary time to research comparables and the review process. You can also talk to a real estate broker if you want to sell, but think the municipal assessment is unfair. A broker can help you determine if applying for a review is appropriate.