Market values and property taxes in Western Canada

Looking ahead: 2024 property tax assessments

Property taxes in BC and Alberta are based on the most up-to-date assessed values in Canada. These two provinces reassess all properties annually based on values as of July 1 of the previous year, meaning property taxes are based on the market as of 6 months ago. Provinces like Quebec, Saskatchewan, and Ontario, on the other hand, may be 4-9 (or more) years out of date by the next reassessment.

Both provinces also provide an opportunity to review and discuss next year’s assessment values before notices are issued. The preliminary 2024 assessed values released to date suggest that despite cooling markets and rising capitalization rates in the ongoing high interest rate environment, assessed values continue to rise. This will lead to increased property taxes in some sectors, putting further upward pressure on operating costs.

Here’s what owners and managers of commercial property in Western Canada need to know for 2024 property tax budgets, including how to make the most of opportunities to reduce property tax and boost net operating income.

Last year’s stories – big increases for industrial sector, higher non-residential tax rates

In British Columbia, the assessments of most properties increased between 2022 and 2023. Industrial property types saw the most significant jumps in value, particularly in Vancouver’s surrounding areas such as Coquitlam, Richmond, and Surrey, with year-over-year increases of around 30%.

Figure 1 - Assessed value increases 2022 to 2023 BC cities

In Calgary, a 3% decline in value for office buildings was offset by a 5% increase in retail and 7% increase in industrial values, resulting in an overall growth in the commercial assessment base of 3% - the first such increase in seven years. In Edmonton, the total value of commercial property in the city increased by 8% for 2023. The highest increases were on industrial properties, which saw an average increase of 15%, while assessed values of downtown and suburban office properties declined.

Adding to the burden of increased assessed values are tax rates that favour residential properties over commercial. Altus Group’s annual Canadian Property Tax Rate Benchmark Report 2023 identified an average commercial-to-residential ratio of 2.82 for cities in the survey for 2023. In British Columbia, most major cities have much higher ratios than the average. Calgary’s commercial-to-residential ratio increased almost 9.5% this year, and is now just behind Vancouver’s, while Edmonton’s ratio dropped and is well below the average.

Figure 2a - 2023 tax rates, ratios and increases – BC and Alberta municipalities

Figure 2b - 2023 tax rates, ratios and increases – BC and Alberta municipalities

Happening now – preliminary 2024 value (pre-roll) consultations

BC Assessment, as well as assessment departments of some Alberta cities, including Calgary and Edmonton, offer taxpayers the option of reviewing next year’s assessments before they are finalized. This provides taxpayers an opportunity to discuss the valuation with the assessor and correct any errors – and allows both taxpayers and municipalities to gain insights for next year’s tax budget.

British Columbia

To take advantage of the pre-roll consultation opportunity, taxpayers in BC must provide formal notice to the assessor by the late-summer deadline, which was August 30 this year. The notice must be accompanied by a substantial amount of data; for tenanted properties, this includes detailed property income and expense statements for the past three years, a current rent roll and 2023 revenue and performance data.

This year the pre-roll consultation period runs from October 6, 2023, to December 1, 2023, for certain specialized properties, including major retail, hotel/motels, casinos, and office buildings. For all other non-residential properties, the pre-roll consultation period is October 27 to December 1, 2023.

Alberta

Calgary’s window for pre-roll consultation is only 30 days, and Altus’ Calgary team had all hands on deck to complete reviews by the November 3 deadline. The advance consultation period in Edmonton began October 12 and will conclude December 13. Calgary provides access to preliminary values on its website, while Edmonton’s are available to taxpayers on request.

The pre-roll consultation period is an excellent opportunity to proactively correct any errors in your assessment. Discussions with the assessor may result in a better understanding and even an acceptable assessed value that eliminates the need for a formal appeal. Our preliminary consultations resulted in over 8,000 assessment reductions in BC and Alberta last year.

2024 assessment previews

British Columbia

In Vancouver, Altus market analysts observed a significant reduction in transaction volumes and rising capitalization rates for the first half of 2023. Despite this evidence, Altus Group’s review of preliminary 2024 values provided by BC Assessment indicates that assessments are continuing to rise in most sectors:

• Development land is up an estimated 15% in Vancouver – some industrial land in Metro Vancouver is slated to increase more than 20%

• Office buildings are up approximately 7%

• Industrial and warehouse properties are up 13-15%

• Retail/ shopping malls/big box up 5-9%

• Car dealerships up 10%

• Banks are up 5%

• Commercial strata up 5%

• Fast food up 6%

• Residential up 5%

Alberta

The City of Calgary held a pre-roll symposium October 5, and released details of its market analysis. Preliminary values released by the Calgary assessing authority indicate that assessments for multi-family properties are increasing, based on higher rents (up 6-13%) and decreasing vacancy rates. The values of industrial properties are also increasing – particularly for warehousing, with average assessments up by 12%. Class A office values are up 4-10%.

The number of retail sales and total sales value were higher in the first half of 2023 than in the previous 2.5 years. Retail values are up more than 8% year over year based on lower vacancies and higher lease rates, and the typical retail property assessment is rising by 8-12% (outside of the downtown area).

Our reviews of preliminary 2024 values in Edmonton have indicated the following assessment changes, based on our sample of properties:

• Industrial properties larger than 100,000 square feet (sf) are up almost 10%

• Multi-residential values are up just over 3%

• General retail is up slightly, while shopping centres are increasing by almost 10%

• Office is down by 3%

• Land – not much change in industrial or commercial, multi-res down by 3%

Designated Industrial Property (DIP)

Values of DIP properties are based on a 2005 valuation model, adjusted to reflect changes noted in the Assessment Request for Information (ARFI) and the 2024 assessment year modifier. The province released proposed modifiers for 2024 on November 6, and once again assessments for most DIP property types will be increasing.

Figure 3 - Preliminary 2023 assessment year modifiers (AYMs)

Coming soon: Assessment notice delivery and appeal deadlines

British Columbia: 2024 assessment notices are issued January 1; the appeal deadline is January 30.

Alberta: 2024 notices arrive between January and February, with appeal deadlines falling 60 days from the date of the notice (March-April).

Always review your assessment notice and make note of the final date for the appeal.

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