Before getting all their emotions typed up in a panicked knot, or taking off on a joyful spending spree thinking the equity in their home is worth far more than it is, homeowners should clearly try to understand one very important thing – tax assessment is not market value of your home in Vancouver BC.
Simply put, the tax assessment on a piece of property is the amount of money the government has decided it needs to collect from property owners for the shared cost of paying for government services and expenses for that political subdivision. The government takes a look at the homeowner’s property, decides what it thinks the market value of their home should be from their perspective and experience, then applies their tax assessment to that figure. The problem today is that home markets and values have changed drastically, making all the government’s past experience in determining property values and assessments unreliable when trying to apply that knowledge to homeowners’ properties today. Worldwide, homeowners have appealed assessments over these discrepancies, often winning themselves huge savings over neighbors with similar homes who didn’t appeal their assessments. In those cases, apparently, homeowners took action once they understood that vital concept – tax assessment is not market value in Vancouver BC real estate or too many other places around the world right now.
From a quite different perspective, a prospective buyer will look at a property owner’s home, make them an offer they think that home is worth to them, and if the seller accepts that offer or a modified one that both buyer and seller both agree on, then that is the actual true market value of their home. It is the actual value of the home because that’s what it actually sold for in the marketplace on that date.
In all actuality, the market value of any home is what a reasonable buyer actually pays to a reasonable seller for their home in a reasonable marketplace, without duress or any other disadvantage pressing upon an otherwise normal marketplace and otherwise reasonable buyers and sellers. Homes sold under threat of or in actual foreclosure or bankruptcy are not part of a reasonable typical marketplace.
The catch today is that there is nothing typical about the economic Vancouver condo marketplace at this time. So when looking at the numbers any government assigns for market value and tax assessment now, well, it just can’t be trusted to tell a homeowner any kind of reliable information about the true value or market value of their home.
In fact, the only solid bit of analytical data Vancouver homeowners can rely on in today’s market is that tax assessment is not market value in Vancouver BC.