You say “no property tax increase” but you increase the value of our homes (based on sales) and then we automatically get an increase. If the value of our homes go down, our property tax doesn’t decrease by the same percentage. How does this work?
It’s often assumed that property taxes go up when a home’s value goes up. The truth is, property taxes and home value have a more complicated relationship.
Each year, Council sets a budget. Property taxes are determined by this budget amount, because the City collects what needs to be collected for the budget--no more and no less. When a budget is set, you’ll hear what the upcoming “property tax increase” (or decrease) is for Edmonton. Really, this is the tax increase that would be paid by the typical Edmonton property owner.
What is a typical homeowner? It’s someone whose home is worth the average amount for Edmonton homes and whose home’s value increased or decreased by the typical amount for similar properties.
But this is just an average, to give people a sense of whether taxes are going up or down for Edmonton as a whole.
In a sense, every homeowner has their own personal property tax. It’s determined, not only by what your home is worth, but also by whether your home gained more or less assessment value than was typical for homes in Edmonton. If your home gained value last year, but gained less value overall than homes across Edmonton, your tax increase will be lower than the tax increase for those other homes. You might even have a tax decrease.
Because it’s all about the value your home gained or lost compared to other homes in its class (residential), it is possible to have a higher assessment value and a lower tax bill. It’s also possible to lose assessed value but have a higher tax bill, if you lost less value than was typical for other homes.
This is a little harder to understand than simply charging higher rates to more expensive homes, but the intention is that it’s fairer.
The combination of the overall amount of money that the City’s budget requires and the change in assessed values determines the tax rate and that rate, applied to your assessed value, determines your individual tax bill.
More information about property taxes and assessment can be found here, under How Property Taxes and Property Assessments work.
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