Monday, August 15, 2011

Questions about Pelham's Property Taxes

Over the last couple of months, a handful of residents have asked me questions about their property taxes.

For example, a few people asked why their property taxes went up after I wrote in March to expect a 0.1% decrease for the average residential property.

A few others were elated because their 2011 property taxes decreased – and decreased substantially – from 2010.

Why these inconsistencies in the experience of different home-owners? Why did some specific property taxes go up while others specifically went down?

You see, in March I wrote that “…the average residential property value for 2011 is expected to be $272,000. If your home and property were assessed at that value, you would be paying an additional $11 or a total of $1,258 on the Pelham portion of your property tax bill. This accounts for an increase of 0.9% for the average residential property in Pelham.

“But, that’s only 34% of your tax bill; the Region makes up 49% of the property taxes you pay in Pelham, while the Provincial educational portion is the remaining 17%.”

For the average residential property, the Regional portion of your tax bill deceased by 1.0% and the Education portion increased an average of 0.3%.

In March, I wrote “So, when you account for all these changes, I am pleased to let you know that the average residential property in Pelham (valued at $272,000) will see a total property tax decrease of roughly 0.1%.” For the average residential property, the combined property taxes paid in 2011 over 2010 decreased by approximately $4.00.

But, for clarity, that is only for an average residential property of $272,000 that increased an average of all increases in residential assessment. For 2011, that average increase was 4.62%.

But, what if the assessed value of your residential property increased more than the average? Or, what if the assessed value increased less than the average?

If your assessed value increases more than the average increase you will pay more than average. For example, if the assessed value of your home increased by 7% from 2010 to 2011, that’s higher than the 4.6% average, and you would pay more, despite the 0.1% average decrease.

By the same token, if your assessed value increases less than the average – say by only 3% -- you will likely pay less tax.

I hope that helps explain why the specific experience of property owners will likely be different that the average that we use to explain the effect of budget changes each year.