Worrying increases in property values, in Montreal as elsewhere

Property values ​​have exploded in Quebec following the real estate boom of the past two years, which has property owners fearing an increase in their taxes. Even if the increase will not be proportional to that of the property assessment, it could still hurt those who are already under pressure because of the rise in interest rates. And many tenants could pay the price.

Many Montreal homeowners swallowed their coffee the wrong way in the last few days when they were notified of the increase in the value of their property listed on the new property assessment roll of the Montreal agglomeration, which will come into effect on 1er January 2023 for a period of three years. We are talking about an average increase of 32.4% in the property assessment on the island, a percentage that reaches 35.5% for the residential sector, unheard of since 2007.

However, this increase will not have such a pronounced impact on the tax notice of Montreal property owners, specifies the City. In addition to spreading the impact of rising property values ​​over three years, Montreal will revise the tax rate for each $100 of property value downwards this year, confirms the To have to the president of the executive committee Dominique Ollivier.

Municipal taxes for Montreal homeowners will therefore not increase as much as the property value of their home.

« It is certain that there may be tax increases, but that will certainly not be a corollary to the increase in property assessment », indicates lawyer Cassandre Louis, partner at De Grandpré Chait and specializing in real estate law.

To determine their tax rates, municipalities first determine their budget and the property revenues they expect, then divide them by property values, explains Ms.e Louis. These rates should therefore fall and mitigate the apprehended shock. But we will have to wait for the tabling of the budget of the City of Montreal, next November 29, to have the heart net.

On the other hand, the owners who undergo an increase in the property assessment above the average can already expect to see their tax notice inflate more significantly, estimates the specialist in real estate law.

For example, in Montreal, the property assessment of condominiums increased by 30.7% in the 2023 roll compared to the previous one, that of 2020. The assessment of single-family homes jumped by 38.6%.

« Given the increase in real estate in recent years, it is also not surprising that there has been an increase in property assessments, » recalls Vanessa Hergett, lawyer specializing in municipal law at Beauregard Avocats.

The property assessment is fixed on a given date, every three years, and is not a « political order », recalls Ms.e Hergett. We must not believe that “cities are trying to fill their pockets,” she stresses.

Taxes inflated by inflation?

The current rate of inflation, which is hovering around 7% in Quebec, could on the other hand increase the tax burden of Montreal homeowners.

There is indeed a limit to the City’s ability to « absorb » part of the inflation by eating into its surpluses – or by increasing its debt – agrees the president of the Montreal executive committee. The metropolis will therefore not be able to limit this year the increase in taxes in the residential sector to an average of 2%, as it did last year, admits Ms.me Olivier.

« But in preparing our budget, we turn every stone and we look at what can be done to respect the quality of the services we provide and at the same time respect Montrealers’ ability to pay, » she promises. .

The Corporation of Quebec Real Estate Owners (CORPIQ) also expects the increase in municipal taxes imposed on the residential sector to be close to 5% in the next Montreal budget. This would have a concrete effect on the finances of the owners, but also of their tenants, she warns. “This is where it brings back the false impression that tenants do not pay municipal taxes. This is false: there is a part of their rent that will adapt to the increase in property taxes, ”recalls the director of public affairs for CORPIQ, Marc-André Plante.

In addition, the increase in the real estate value of a property can have the effect of increasing home insurance premiums and school taxes imposed on owners. So many expenses that can be transferred to tenants by means of an increase in rents, adds Mr. Plante.

« From experience, when there are higher than usual tax increases, landlords use this pretext to impose much higher rent increases than those imposed on them, » says him the spokesperson for the Regroupement des committees logement et associations de tenants du Québec, Martin Blanchard.

A criticized model

In addition, voices are being raised to criticize the fact that the new property assessment roll is based on the value of properties as of 1er July 2021, when the real estate market was experiencing a period of overbidding marked by strong demand. However, housing starts have since declined, as have property sales, which has led to a slowdown in the real estate market that this new role does not reflect, deplores CORPIQ.

“It’s a bit like taking the temperature of the water in the middle of July and applying it in the middle of December, when the water is at its coldest. The reality is that the new role in Montreal is being applied at a time when the real estate market is in worse shape,” said Mr. Plante. The latter thus believes that a large number of owners could decide in the coming months to contest the property assessment of their property, arguing that it is not representative of reality.

More than 300 people had already signed an online petition, Wednesday afternoon, to oppose the increases listed on the new property roll of the City of Montreal. The document calls for the next municipal budget to be based on the 2020 roll rather than the one that will come into effect next year.

Requests for review can be filed until 1er next May.

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