Rising property values: what does it change in your portfolio?



The overheating of the real estate market has caused the value of the vast majority of properties in Montreal to skyrocket. The new property assessment role of the city of Montreal shows an overall increase of 32.4% compared to 2019, unheard of since 2007. But how does this calculation affect the portfolio of ordinary mortals?

• Read also: Relying on the municipal assessment to buy a property is not a good idea!

What is Property Assessment?

The property assessment roll – or municipal assessment – ​​is an exercise done every three years to determine the “real value” of all buildings located on the territory of a municipality. The value of a property listed on the property roll is the sum of the assessment of the land and that of the building.

It is from this data that the tax bills are calculated: in general, the higher the municipal value of your property, the higher your municipal taxes will be. Property taxes are the main source of revenue to finance the activities of the city.

The land value of a property is the most probable price that a buyer could pay during a sale by mutual agreement. It should not be confused with market value, which is the price at which a home should sell based on supply and demand. To know the fair market value of a property according to the market, it is rather necessary to call upon a chartered appraiser.

• Read also: What you absolutely need to check before buying a condominium

Very strong growth

The new assessment roll of the City of Montreal shows an overall increase of 32.4% compared to the values ​​entered in the previous rolls. Three years ago, the value of buildings had increased overall three times less, by 13.7%.

Thus, on the island of Montreal, single-family residences saw their value increase by 38.6% on average. Condominiums are up 30.7%, while the value of small income properties with two to five units, commonly referred to as plexes, is up 35.5%.

Non-residential buildings posted an average increase of 25.7%. It is in the category of industrial buildings that we find the greatest increase in value, with growth of 60.5%.

• Read also: This « house » could be yours for less than $1000… but there is one condition

Upcoming tax hike?

The assessment roll serves as the basis for calculating municipal and school taxes. It is therefore a safe bet that owners will have to loosen the purse strings to absorb a new increase in municipal taxes starting in 2023.

However, this does not mean that a 32% increase in the value of your property will result in an equivalent increase in the tax bill, specifies the City of Montreal.

The City has several tools to curb the increase. It can, for example, revise the tax rate downwards so that the amount of taxes does not exceed a certain level.

During the last municipal elections, Valérie Plante had also promised that the increase in municipal taxes would not exceed inflation, which was then at a level of 4.7%. Last June, the Board of Trade of Metropolitan Montreal demanded that the Plante administration limit tax increases to 3%, despite a higher inflation rate.

It will therefore be necessary to wait until the end of November, when the budget of the Plante administration is tabled, to find out the variation in municipal taxes and the measures that the City could put in place to mitigate the impacts of this increase.

Note that for several years now, the City of Montreal has been spreading the tax increase over three years to “mitigate the repercussions of an increase in value” on the wallets of Montrealers.

The new property values ​​will come into effect from January 1, 2023 and will be used as the property tax base for the fiscal years 2023, 2024 and 2025.

To consult the new register and find out the property value of your property, go to here.

-With Martin Jolicoeur and Julien McEvoy




journaldequebec

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