Property Assessment and Taxation

 

Assessment and taxation are two separate processes – 

  • Assessment is the valuation of your property using Provincial government regulations and guidelines.  It is the basis for a municipality to levy a property tax.
  • Taxes are the amount of money a municipality collects from each assessed person in order to pay expenditures and requisitions as established in the annual budget.  Taxation is your assessment multiplied by the mill rate as set by the municipality.

 

Assessment Overview:

Property assessment is the valuation of property for the purpose of fairly and equitably distributing a municipality’s total property tax burden amongst all the property owners. Your property’s assessment does not generate property taxes by itself. 

All property assessments are prepared under direction of the Alberta Municipal Government Act (MGA), and relevant Regulations and Minister’s Guidelines.  These documents define property and classes, and provide the instructions and standards the Assessor is to use when preparing the assessment. 

Property is defined under Part 9, Section 284(1) of the MGA as follows:

“…(r) “property” means
(i) a parcel of land,
(ii) an improvement, or
              (iii) a parcel of land and the improvements to it;

An improvement may be anything added to a vacant parcel of land including buildings, gravel, paving, fencing, light poles, towers, etc.  Improvements also include machinery and equipment used for manufacturing and processing and do not have to be physically attached to the parcel of land.

For property assessment purposes there are two ways of valuing property in Alberta:  
 1)      Regulated – These properties are valued according to procedures and rates published by Alberta Municipal Affairs for the express purpose of assessing properties. Regulated properties include farmland, machinery & equipment, and Designated Industrial Property (discussed later).

2)      Non-Regulated – These properties are valued at their estimated “market value”, and include residential, commercial, and industrial properties not categorized as regulated (i.e. residences, acreages, warehouses, railway gas stations, restaurants, agri-business such as fertilizer facilities, etc.). 

Some properties, such as farm residences, have both regulated and non‑regulated components considered in their total assessment.

For “Non-Regulated” property, the Assessor must determine an annual estimate of “market value” that is based on the “fee simple estate” as of July 1 of the assessment year.  The assessment year is the year prior to the one in which a tax is imposed. For example, 2020 property taxes are based on the 2019 assessment year.  For the 2020 taxation year, the “effective date” of the assessment is July 1, 2019. This value reflects the characteristics and physical condition of the land and improvements of the property is December 31, 2019 – this is known as the “condition date”.

Alberta Municipal Affairs audits every municipality’s assessment each year to ensure it meets the quality standards set out in the MGA, Regulations, and Minister’s Guidelines.  Assessment Auditors examine the Assessor’s data submission and report back to the municipality upon completion.

The property assessment within each municipality in Alberta, is divided between the Municipal Assessor and the Provincial Assessor. The Municipal Assessor of the Municipal District of Willow Creek completes the annual assessment of residential, farmland, non-residential, machinery & equipment – those properties not classified as Designated Industrial Property (DIP).

The Provincial Assessor, as part of Alberta Municipal Affairs, is responsible for the property assessment of all Designated Industrial Property (DIP) in Alberta. DIP includes all properties formerly defined as Linear Property, all petroleum production related properties, major plants as designated by Regulation/Minister’s Guideline (such as pulp mills, lumber mills, oil refineries, gas & petrochemical plants, etc.), and railway (including privately owned spur and rail lines).

What does an Assessor need to know about my Property to prepare the Assessment?

The MGA authorizes the Assessor the “right to enter on and inspect property” after the owner/occupier has been notified and informed the purpose of the inspection is to collect information to prepare an assessment of the property for taxation purposes.  The property owner has a “legal duty to provide information” to the Assessor upon request or he/she may be unable to make a complaint pertaining to that assessment.

To prepare an estimate of the value, the Assessor needs to know about your property. Information typically gathered on a property includes the type, size, age, improvement characteristics (e.g. heating type, plumbing fixtures, interior finish), and the determination of a property class based on the use of the improvement and/or property (e.g. residential, farm, commercial, industrial/manufacturing) – a property may have dual purposes (residential and farmland, etc.).

 Data collection may be in the form of a physical inspection, in-person or phone interview, by mail-in questionnaire, or using electronic data available through photos, land titles, permits obtained, etc. Your assessment is only as accurate as the information provided to, or gathered by the Assessor when requested.  It is the owner's responsibility to contact the Assessor and review their property assessment(s) to ensure the details are accurate.

Once the Assessor has gathered all the pertinent data on properties in the municipality, he/she will “stratify” or categorize the properties into comparable groups according to their location, use, age, type, characteristics, etc.  For example, properties used primarily for residential purposes are “classed” as residential, and may be further “stratified” by sub-class such as “vacant” or “improved”.  This is important to ensure that properties are valued fairly and equitably with other similar properties. 

How does the MD of Willow Creek Calculate Your Property Assessment? 

Non‑Regulated (Market Value) Property             
In Alberta, “Non-Regulated” properties are valued according to the “market value” standard set out in the MGA and Regulations. There are three approaches to valuation when valuing real property; however, the “Sales Comparison Approach” and “Cost Approach” are the most commonly used when evaluating properties.

 Regulated Property        
 “Regulated” properties, such as Farmland, or Machinery and Equipment, are valued using the appropriate procedures, tables and rates set out by the Provincial Government in Legislation relating to each property class and type of property.

The MD of Willow Creek contracts property assessment services to Benchmark Assessment Consultants Inc. (based out of Lethbridge), which are accredited municipal assessors for the Province of Alberta.  Inquiries on your assessment should be directed to Logan Wehlage, A.M.A.A. at 403-381-0535, or lwehlage@benchmarkassessment.ca.   

Benchmark Assessment Consultants constantly re-inspects properties to ensure all details are kept current.   Often, these re-inspections capture changes that might include construction / demolition of structures, building deterioration, increases in market value, breaking grassland for growing crops, etc.  

How is my assessment arrived at?

Farmland with Residence:

  • The first three acres of a farm parcel with a residence is assessed at market value - as if it were a subdivided parcel. This is shown as the residential category on your Notice. 
  • The remainder of the land is assessed on the ability of the land to produce agricultural products. The assessment takes factors such as soil quality, topography, stones, creeks, etc. into consideration. The Farmland Assessment Manual was utilized in preparing farmland assessments. The Rural Assessment Policy applies the amount of agricultural valued land assessment in the owner's unit as an exemption towards the residence (maximum for principle residence is $61,540 and for secondary residence is $30,770). 
  • The residence and buildings used for non-farm use are assessed at market value, as of July 1 of the year preceding the tax year. Farm buildings are exempt from assessment to the extent they are used for farming purposes.

Residential Properties:

  • Residential properties are assessed at market value, as of July 1 of the year preceding the tax year (i.e. July 1, 2019 for 2020 taxation). 
  • Market value is determined by analyzing the sales of all property types throughout the municipality. Mass appraisal techniques are used in this valuation process. 
  • The Alberta Provincial Government regulates that the "assessment ratio", the ratio of the assessment to an indicator of market value for a property, for all residential properties be 95% to 105% for the median assessment ratio. In the Residential category, the one overall assessed value represents the Market Value of your property to be used for assessment and taxation purposes.

Non-Residential Property:

  • Non-residential property refers to either industrial or commercial operations, such as industrial plants, gravel pit operations, meat processing facilities, etc. 
  • Properties that have a multi-purpose use, such as a commercial business operating from a residential acreage, would have the commercial portion of the assessment classed as non-residential. 
  • The non-residential category of land, buildings, and structures is assessed at market value as of July 1 of the year preceding the tax year. 
  • Linear property includes cable, electric transmission lines, telecommunication equipment, pipelines, wells, and towers; and is part of the non-residential assessment category.

Machinery and Equipment:

  • Machinery and equipment that is used for processing or manufacturing are assessed at a percentage of regulatory level. 
  • This category includes properties such as gas plants, certain gas & oilfield installations, refineries, gravel crushing operations, concrete and asphalt batch plants, steel and foundry works, etc.

Communication with the property owner is an important part of the valuation process as we strive for a fair and equitable property assessment.

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