Property Tax Negotiations
PacWest believes in starting all tax negotiations with a comprehensive review of each individual property assessment’s valuation methodology by reviewing the assessor’s working papers and calculations. We then discuss our findings with the property taxpayer outlining our recommendations. Once a plan of action is agreed upon, we enter into proactive dialogue with the local assessment office to narrow issues of concern in an attempt to resolve any differences. This approach is preferred by the BC Assessment Authority staff as it allows both parties to focus their resources on resolving differences, ultimately settling an appeal without the need for expensive and protracted appeals.
However, when dialogue and information exchanges produce no tangible results, we will seek a mandate to continue with a formal appeal. We will file all necessary appeals to the appropriate appeal bodies and prepare and attend all necessary appeal hearings to present the taxpayer’s case.
The BC Assessment Authority typically takes the position that it is the property taxpayer’s responsibility to prove that the assessed value is above market value. However, the BC Assessment Authority does not openly discuss the requirement that their assessment values must be both fair and equitable. Fair means that the assessed value is not above market value as at July 1st in the year of valuation. Equitable value means that the assessed value is equitably assessed at a similar rate with similar, competing properties in the same taxing jurisdiction. An appeal must satisfy that the assessment value is both fair and equitable and the taxpayer is to receive the lower of the two. This means that a property may be assessed at market value but if similar properties are assessed at a lower rate, then the assessment must be reduced to that equitable value.
PacWest understands how to prepare an equitable valuation challenge based on our strategic knowledge of the BC Assessment Authority and access to real estate sales and property assessment data.
Tim Down has significant property assessment review and appeal experiences both in his former employment as a Senior Supervisory Appraiser with the BC Assessment Authority and as a property tax agent involved in numerous review panel hearings, appeal board hearings and court cases.
Property Tax Planning
Good property tax planning is critical, as property taxes make up a significant portion of the annual operating expense and holding cost of real estate. Property owners are responsible for the review of their annual property tax notices.
Annual property tax budgeting can be difficult as assessment values can fluctuate dramatically from year to year compounded by potential property tax rate increases. Surprise property tax increases upsets tenants and landlords alike as they affect the budgeted cashflows of everyone involved.
Pre-assessment roll consultation with the BC Assessment Authority can reduce these unplanned surprises. However, it is always prudent to seek the advice and knowledge of a property tax professional and in these matters before contacting an assessor.
Property Tax Consulting
PacWest also assists property owners and tenants with:
- Audit of annual property tax calculations
- Assist with landlord / tenant property tax allocation disputes and arbitration
- Property tax budgeting
- Assist with property assessment information requests
- Assist with new construction and preliminary property assessment valuations
Property Transfer Tax Consulting
Property Transfer Tax is a registration tax that is paid whenever an interest in real property is acquired.
Property transfer tax is payable on the fair market value of the real estate being transferred. Fair market value is interpreted as the price that a willing purchaser would pay to a willing seller in the open market. In most circumstances, the actual price is the best indicator of the fair market value. This tax is applied to the fair market value of land and any improvements situated on the land.
The current property transfer tax is charged at a rate of 1% on the first $200,000, 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000 and 3% on the portion of the fair market value greater than $2,000,000.
Property transfer taxes are a tax on changes to the registration of a property and can be triggered as follows:
- Transfer of legal title when purchasing real estate
- Registering a right to purchase or an agreement for sale
- Leases and lease modification agreements
- Life estates
- Property transfers due to corporate reorganizations
- Estates, forfeitures, quit claims
- Crown grants
All taxable transactions are taxable at fair market value whether or not money was exchanged.
A property taxpayer must file a Notice of Objection, by mail, within 90 days of receiving a Notice of Assessment from the Ministry staff if they wish to dispute the Ministry’s determination of fair market value.
Expert Evidence and Testimony – PacWest Commercial Real Estate Advisors
PacWest has been involved in real estate valuation, property assessment and property tax appeals for over 28 years.
We routinely work with property owners, tenants, property management companies, receiver managers, accountants and lawyers in the management of property taxes in British Columbia by assisting with property assessment appeals, property tax allocation disputes and property transfer tax appeals.
This assistance ranges from taking carriage of a protective assessment appeal to assisting lawyers in the preparation of expert valuation reports and providing expert witness testimony before the Property Assessment Review Panel, Property Assessment Appeal Board, First Nations’ Assessment Review Boards and Courts.
PacWest specializes in tax minimization with the annual review of property assessment notices to determine if the valuation is fair and equitable. Our process starts with a comprehensive review of the assessor’s working papers as well as market transactions to ensure the assessed value is not above market value as at July 1st. We also review the property tax classification and applied exemptions.
We follow up by reviewing the assessment values of similar, competing properties within the subject neighbourhood and/or taxing jurisdiction in comparison to the subject property.
Lastly, we review the annual property tax notices to ensure that the assessed value is accurate, all exemptions are applied and the property taxes as calculated are accurate.
Where any discrepancies or errors are discovered, we set out the issues for the client with our recommendations and appropriate strategy. We then secure the mandate to enter into proactive dialogue and information exchanges with the Assessment and Taxation Authorities in an attempt to resolve the identified issues.
By following each step for tax minimization, the taxpayer can be assured that their annual property tax expense is fair.