Cochrane homeowners will be paying more in property taxes in the coming year, which is unlikely to be a surprise to most, as the notion that your taxes will decrease is an overly optimistic one at best.
That being said, the increase is a modest one, amounting to just over $3.50 a month on an average Cochrane home assessed at $465,800 in value. Municipal taxes will increase by 2.9 per cent ($58.99 a year), but education taxes are decreasing 1.65 per cent ($16.53 a year), leaving a total tax increase of 1.4 per cent, or $42.46 a year.
Property taxes are based on a mill rate calculation, where the total assessment value of one’s home is multiplied by the mill rate, which is set by council. Mill rates are lower for residential properties than they are for non-residential, or commercial/industrial properties.
Though the assessment method has long been the practice for calculating property taxes, it begs the question: where is the incentive for a person to upgrade their home if they are thanked by having to pay higher property taxes after doing so?
If Mr. and Mrs. Smith buy a home in West Valley for $400,000 in 2014, with last year’s residential mill rate being .0044, they would expect to pay around $1,760 in municipal property taxes.
Now let’s say, Mr. and Mrs. Smith decided they want to upgrade their home. They do some landscaping to make the yard look better, they re-shingle the weathered roof, finish their basement and make some upgrades to their kitchen. All in, they spend around $25,000 on their upgrades and not only does it look much better in the neighbourhood they live in, it also is valued much higher, and the following year is assessed at $455,000.
With the 2015 mill rate set at .0045, the Smiths can now expect to pay $2,048 in property taxes, an increase of $288 from the previous year.
So, in essence, the Smiths are being punished by their municipality with higher taxes because they chose to make their home a better, more attractive place to live.
Increasing your home’s value by $55,000 and having to pay an extra $288 a month in taxes certainly isn’t a reason to avoid investing in your home. But the point is that people shouldn’t have to face any kind of deterrent, but should rather be rewarded for upgrading their home, which in turn means they are making an investment in their community.
Rather than charge homeowners who make improvements to their property, assessment values should be based on the price the homebuyer purchased their house for, with annual real estate value increases built into that each year; assessment values should not include investments made into the home, and then be met with an increase in property taxes.