It's that time of year again.
Property tax notices will be hitting the doorsteps over the next month and with them can come some confusion for residents. Many people do not understand how their property assessments relate to their tax increase or how rates correlate to municipal revenues.
To help clarify some of the confusion, the city of Coquitlam’s finance and technology department has provided four property tax myths it hopes to dispel as tax bills begin to arrive this season:
• Myth 1: When property assessments increase, the city receives more revenue.
The city does not generate more tax revenue as a result of rising property values. The required tax levy to be collected by the city is determined by council as part of the annual budget, and tax rates are lowered to reflect assessment increases and ensure that only the amount of tax revenue is collected needed to support the budgeted expenditures. This BC Assessment video explains the relationship between assessed property values and property taxes, which can be seen here.
• Myth 2: The city said that the tax increase was 2.56% but my increase is more (or less) than that amount.
The property tax increase set by council applies to the overall tax levy but the extent of change of an individual property’s tax is determined primarily by how that property’s assessed value has changed relative to the average change within its property class. Properties with a higher increase in value relative to the average change of the class could experience a higher increase in property tax beyond the council-approved increase while properties with a lower increase in value could experience no change or a reduction in property tax. This applies to both residential and non-residential property classes.
• Myth 3: My property assessment increase went up 20%. Does that mean my taxes will also go up 20%?
If assessment values go up on average, the tax rate will go down. As highlighted on the back of the Property Assessment Notice, while the assessed value of the property determines the amount of taxes that you pay, the property assessment increase does not determine the tax increase. The tax increase depends on how the assessed value of one property changed in comparison to the average for other properties in that class in Coquitlam. If the property assessment increase is greater than the average increase for that property class, the property will most likely see an increase in the property taxes whereas taxes will decrease if the property assessment increase is less than the average residential property.
• Myth 4: The city is collecting more taxes this year as there are new items on my tax bill.
The city’s responsibility is solely to determine how much it will cost to provide its municipal services (for example: policing, fire protection, parks, recreation, roads, etc.) and to set the resulting municipal tax levy. In 2019, for example, Coquitlam’s municipal taxes are only 68% of the total tax bill. The city also collects on behalf of other agencies such as the provincial government’s school taxes (including the new Additional School Tax), BC Assessment, TransLink and the Municipal Finance Authority. These levies are set by other taxing authorities and are outside the control of the city.
