What are my property taxes used for?
Your property tax bill generally consists of two major items: (1) municipal taxes and (2) provincial education property taxes.
- Municipal property taxes are set by the municipality to pay for local municipal services such as road maintenance and snow clearing, street lighting, parks and recreation facilities, police and fire protection, land use planning and community programs.
- Education property taxes are set by the Government of Alberta. The municipality collects the tax and forwards it to the Government of Alberta to pay for primary and secondary education delivered by schools boards across the province.
In some communities, the municipal tax portion may include requisitions to fund the operations of community organizations such as seniors housing.
How is the value of my property determined?
Depending on the type of property, assessments are determined using either a market value based standard or a regulated procedure based standard. The majority of residential and commercial properties are assessed using the market value standard which estimates the value your property would likely sell for on the open real estate market between a willing buyer and seller. Most commonly this value is determined through a comparison of similar properties and recent sale prices. If sales data is not readily available for a particular property, an assessor may also use an income approach or cost approach to determine the market value assessment.
Properties such as farmland, machinery and equipment, railway property and linear property are difficult to assess using market value because the properties seldom trade in the market, they cross municipal boundaries or are of a unique nature which is why they are assessed using a regulated procedure based standard. This method requires Alberta Municipal Affairs to prescribe rates and procedures that allow assessors to determine an appropriate assessment value for these properties.
What factors will affect the market value of my home?
Factors that may affect residential market value include the total finished living area, quality of structure, age of structure, level of modernization, building type (i.e. duplex, etc.), structure type (i.e. bungalow, two-storey, etc.), unit type in condominiums, type and size of garage, lot size, lot topography and access, views from the property and location of the property to traffic, greenspaces, community services, commercial properties, multi-family properties, waterways, schools, trains, transmission lines and communication towers.
Why is the value on my assessment notice higher/lower than what my property is worth today?
Your property taxes are based on the value of your property as of July 1 the previous year. This valuation date is set under provincial legislation. As an example, your 2017 property assessment notice will reflect the value of your property on July 1, 2016. Changes in real estate market conditions can result in substantial changes in property values between the time of valuation and when property assessment or tax notices are received by property owners. Any change in those property values will form the basis for the next year’s assessment.
Why is my neighbour’s property assessed higher/lower than mine?
There are a number of factors that can affect the value of property. Consider the following factors when comparing the value of two neighbouring properties:
- Lot size and influences to each lot – i.e. traffic, parks, walk-out lot
- Type of house structure – i.e. bungalow, two-storey, or split level
- Size of the house
- Age and condition
- Basement development – i.e. finished or unfinished or a walk-out basement
- Presence and size of a garage
- Renovations and quality of interior and exterior finishes
How does my property assessment affect my property taxes?
The municipality uses the assessed value of your property to determine your share of municipal property taxes and your share of provincial education taxes.
How are property tax rates determined?
Each year, council will determine the amount of money needed to operate the municipality. From this amount, sources of revenue other than property tax, such as user fees and provincial grants, are subtracted. The remainder is the amount of money the municipality needs to collect through property taxes in order to provide municipal services for the year.
Cost to operate municipality: $1,000,000
Less: Revenue from fees and grants: (300,000)
Property taxes required: $700,000
Total assessment in municipality: $100,000,000
Calculation for Municipal Tax Rate: $700,000 ÷ $100,000,000
Result is a municipal tax rate of 0.0070
The education property tax rate is calculated differently. Each year, the Government of Alberta will determine the total amount of revenue to be drawn from property taxes from across the province to pay for the K-12 education system. The province bills each municipality for its share of the education property tax requirement. This is known as the “education property tax requisition” or “education tax”. Each municipality uses the following formula to calculate its local education tax rate that will be taxed on properties.
Local education tax rate = municipality’s education tax requisition ÷ total assessed value of all properties
A municipality’s 2016 education property tax requisition is $1,200,000 and the total value of assessed property is $475,000,000. Therefore, the calculation is $1,200,000 ÷ $475,000,000 = a local education tax rate of 0.0025.
Note: Both of these calculations only offer a simplified explanation of how municipal and education tax rates are determined and do not account for the creation of multiple tax rates for each type of property. For example, the provincial education tax requisition is split between residential and non-residential properties so a municipality will likely have two different education tax rates depending on the type of property. For more detailed information, visit the Fundamentals of Property Taxation page.
How are my property taxes calculated?
Your property taxes are calculated in three steps.
- Your municipal property tax is calculated by multiplying the municipal tax rate to the assessed value of your property.
- Your education property tax is calculated by multiplying the education tax rate to the assessed value of your property.
- Add your municipal tax to your education tax to equal your total property tax bill.
Municipal tax = assessment x municipal tax rate
+ Education tax = assessment x education tax rate
= Property tax bill
Municipal property tax = $300,000 x 0.0070 ($2,100)
Education property tax = $300,000 x 0.0025 (750)
Property tax bill = $2,850
Depending on the municipality, your property taxes may also include other taxes such as seniors housing or levies that are specific to the location of your property.
Can I appeal my taxes?
No, you cannot appeal your taxes. Property taxes are based on the municipal tax rates that are applied to the values of all properties in a municipality. You may appeal the assessed value of your property but it must be done during the period specified on your assessment notice.
While a property owner cannot appeal the taxes on an individual property, property owners can contact their municipality’s administration or council to discuss opportunities to minimize the level of taxation on all property owners in the future.
If I do not agree with my property assessment, what can I do?
If you have concerns about the information in your assessment notice, you should contact the assessor. If after having a discussion with the assessor, you are still of the opinion that your assessment is incorrect, you have the option to file a written complaint with the municipality’s assessment review board as long as it is filed within the defined complaint period. Instructions can be found on your assessment notice.
I have filed a complaint regarding the assessment of my property. Do I still need to pay my property taxes?
Yes, you must still pay your taxes by the due date to avoid penalties. If a decision on your complaint results in a lower tax levy, you will be credited the appropriate amount.
Does a change in my property assessment affect my property taxes?
Yes, it can. A change in your property taxes is typically a result of three factors:
- Changes in the amount of money required by the municipality’s budget;
- Changes in the amount of money required by the province through the education property tax; or
- Whether the change in your property’s assessed value is higher or lower than the average change in property values in the municipality.
Example: If the value of your property increased by 5 per cent while the average increase in property values in the municipality was 2 per cent, then your property taxes may increase.
Why did I receive a property assessment notice that is separate from my property tax bill?
Your assessment notice was provided near the beginning of the year to give you time to review your property’s assessed value and contact the municipality if you have concerns about the assessment before property taxes are determined. Since you are not able to dispute your property tax bill, you must address any concerns with your assessment notice before the assessment complaint deadline closes.
This approach is not used by all municipalities. Some municipalities send the property assessment notice and the tax notice together in late spring. This means the assessment complaint period is open during the same period that taxes are collected.
Why did I receive a supplementary notice?
You received a supplementary assessment and tax notice because of new construction to your property that was not included in the current year’s assessment and tax notice. You are being taxed on that additional value so that you pay your fair share of property taxes that support municipal services provided to your property in the year. The resulting supplementary tax is pro-rated based on the number of months your newly built property has been completed or occupied.
A property owner receives their 2017 property assessment notice for $100,000 which represents their vacant lot. In April 2017, they start construction of a new house and complete it in October. During this time they pay their property tax on the $100,000 value of their land. At the end of October they receive a supplementary assessment for $250,000, which represents the value of the new building. Supplementary tax will be levied on the value of the building and is pro-rated for the three remaining months (October to December) of the 2017 tax year.
If Council has approved a municipal tax increase, does that mean my property taxes will go up?
A municipal tax increase means the municipality will collect more municipal taxes, in total, from the taxable assessment base. You may experience a tax increase or decrease depending on how your property assessment has changed relative to the average change in property values. For example, council has approved to collect more taxes from residential properties and the average residential market increase is 2 per cent. This means that if your residential property assessment has increased by more than 2 per cent, you will have a corresponding higher total tax increase.
Will my property taxes increase if I renovate my house?
A significant improvement to a property generally increases its market value and subsequently its assessed value because your assessment is based on market value. Improvements such as a new addition, new garage, or basement development will increase your property assessment. Interior renovations may increase your assessment depending on the extent to which the market value has been enhanced.
Are there any property tax programs available for seniors?
The Government of Alberta offers the Seniors Property Tax Deferral Program that allows eligible senior homeowners to defer all or part of their property taxes through a low-interest home equity loan with the Alberta government. If you qualify, the Alberta government will pay your residential property taxes to the municipality on your behalf. You re-pay the loan, with interest, when you move or sell the home, or sooner if you wish.
Can I get information about how my property was assessed?
You are entitled to receive all documents, records and other information in respect of your property that the assessor has in possession. To receive these records, contact the municipality and they will have a prescribed time period to provide you the information.
How do I get information about other comparable properties?
You are entitled to request a summary of information on properties that are similar to yours. To receive these records, contact the municipality and they will have a prescribed time period to provide you the information.
What are the important dates in the property assessment and taxation process?
|July 1||Your property is valued based on what it would have likely sold for on the open real estate market as of this date.|
|December 31||Any changes in the physical condition of your property as of this date are factored into your property assessment from July 1|
|January - May||Assessment notices are mailed to property owners. You have 60 days to file a complaint as per your assessment notice.|
|April – June||Council approves the tax rates and tax notices are mailed to property owners based on the assessed values collected on July 1 of the previous year.|
|June 30||Deadline to pay property taxes is the last business day of June.|
|July 1||Municipalities may apply a penalty to any unpaid taxes owing.|
Land and house are valued at $280,000.
|Dec 31||The assessor notes that a garage was built since July 1. The value of the garage as of July 1 would have been $20,000 so the total 2016 assessment is $300,000.|
|Jan 16||Assessment notice is mailed to property owner with a deadline to submit a complaint by March 24, 2017.|
|May 30||Tax notice of $2,850 is mailed to the property owner. The taxes were calculated based on the $300,000 property.|
|Jun 30||Deadline to pay property tax.|
|Jul 1||Property owner paid the $2,850 of taxes on time so no penalty is applied.|
What is a minimum property tax?
Through a bylaw, a municipality may set a minimum amount of municipal tax on each property. The minimum tax is typically used if a municipality wants all property owners to pay at least a nominal amount for the services received or it wants to recoup the costs it has incurred to administer the property assessment and taxation process. The minimum tax is charged to properties where the calculated property tax is lower than the amount that the municipality has set as the minimum tax.
Council approves a property tax bylaw with a minimum tax payable of $100. The municipal residential property tax rate is set at 0.0025. A property is valued at $30,000 which when calculated ($30,000 x 0.0025) equals a tax bill of $75. Since this amount is less than the minimum tax of $100, the property owner would receive a tax notice of $100 owing.