In simple terms, land tax or property tax is a tax that you pay on the ownership of property. The amount of tax you pay is based on the value of your property.
In Alberta, these properties are taxed based on the “ad valorem” principle, which translates to “according to value.” This means that the taxes you pay are based on an assessment of your property’s worth, as opposed to a flat rate.
But who sets Alberta land prices? How is the value of your property determined? How can one make queries/complaints about these prices? We’re going to take a look at all of that here in this blog so that the next time you get your bill, you’ll at least have a better understanding of how it all works.
Property Tax In General
The general process of property tax goes something like this:
First, the governing municipality will assess the value of all the properties in the jurisdiction. They will then come up with a rate that will be applied to that value to determine the amount of tax that is owed.
Once the rate is set, each property owner will be sent a bill for their share of the taxes. The owner will then have a certain period of time to pay the taxes. If the taxes are not paid on time, there may be interest or late fees added to the bill.
In some cases, the government may also offer tax breaks or exemptions for certain types of properties, such as those used for business or owned by seniors.
Once the taxes are paid, the government will use the money to fund public services in the jurisdiction.
Property Assessment In Alberta
In Alberta, each municipality is responsible for assessing the value of properties within its boundaries. The municipality conducts these assessments annually and in accordance with guidelines set by the Ministry of Municipal Affairs and the Alberta Assessment and Property Tax Policy Unit.
The municipality will use a variety of methods to assess the value of a property, including looking at recent sales of similar properties, the size of the property, and the type of property. There are two main standards that are used to assess property values in Alberta: the market value-based standard and the regulated procedure-based standard.
Market Value-Based Standard
The market value-based standard is the most common method of assessment in Alberta. This method looks at the sale prices of similar properties in the area to determine the market value of a property. This value is then used to calculate the amount of taxes owed.
There are three approaches to determining the market value-based assessment of property:
- The Sales Comparison Approach – Under this approach, the municipality will look at recent sales of similar properties to determine the value of a property. This is the most common method of assessment in Alberta.
- The Income Approach – This approach is used to assess the value of income-producing properties, such as rental properties and businesses. The municipality will look at the potential income that the property could generate to determine its value.
- The Cost Approach – More often than not, new properties or properties that have been significantly renovated will be assessed using the cost approach. Under this approach, the municipality will look at how much it would cost to replace the property with a similar one
Regulated Procedure-Based Standard
Sometimes, it becomes difficult to assess a property because of issues like special zoning, a lack of sales data, or physical features that make it unique. In these cases, the municipality may use the regulated procedure-based standard to assess the property.
Under this approach, the municipality will look at a variety of factors to determine the value of the property. At the moment, there are four types of properties that can be assessed under the regulated procedure-based standard:
- Linear property
- Machinery and equipment
- Railway property
Alberta Land Prices and Tax
Once the municipality has assessed the value of a property, they will apply a tax rate to that value to determine the amount of taxes owed. The tax rate is set by the municipality and is usually expressed as a mill rate.
For example, if the mill rate is 10, that means that the property owner will owe $10 in taxes for every $1,000 of their property’s value. So, if a property is assessed at $100,000 and the mill rate is 10, the property owner would owe $1,000 in taxes ($100,000 x 0.01 = $1,000).
The amount of taxes that a property owner owes can also be affected by the type of property they own. For instance, properties that are used for business purposes are typically taxed at a higher rate than residential properties. The municipality may also offer tax breaks or exemptions for certain types of properties, such as those used for business or owned by seniors.
Every year, a municipality is required to send an assessment notice to every assessed person named on the assessment roll. The assessment notice will include important details like the property’s value, the tax rate, and the amount of taxes owed.
If a property owner disagrees with their assessment, they can contact the municipality to discuss their options. In some cases, the municipality may be able to adjust the assessment. If the property owner is still not satisfied with the assessment, they can file an appeal.
Appealing Your Property Assessment
If you disagree with your property assessment, you have the right to appeal it. This is solidified under the Municipal Government Act which also established a “complaints and appeals” system.
The first step in appealing your assessment is to contact the municipality’s assessment review board. From there, you can file a complaint with an assessor who can request for an inspection and make changes to the assessment if they deem it necessary.
If you’re still not satisfied with the assessment after this process, you can file an appeal with the Alberta Assessment Review Board (AARB). The AARB is an independent board that reviews property assessments and makes decisions on appeals.
Municipalities usually give assessed individuals at least 60 days to file an appeal. The AARB will also require that you submit your appeal within this time frame.
New To Alberta? Need Help With Land?
If you’re new to Alberta, the process of buying land can be daunting. Thankfully, there are a few organizations that can help.
Hansen Land Brokers Inc. is a family owned and operated business that has been helping Albertans with their land needs for years. We’re knowledgeable about the ins and outs of Alberta’s land market and we’re here to help you find the perfect property for your needs.
Contact us today to learn more about our services or browse our website to view our current listings.