Outcome from Council’s Property Tax Discussion & Calculating the Value of your $52 Million Tax Rebate
When council passed its budget last year we approved a property tax increase of 4.8% in 2014 for both business owners and homeowners. The City of Calgary is required by law to bill and collect Provincial property taxes on behalf of the Provincial Government. Calgary sends the required portion to the province, but as it turned out, the province decided not to increase its share of the homeowner property tax, and, in fact decreased it by 1.5 per cent; however, they did decide to increase the business provincial tax rate by 14.2 percent this year. As you may know, business owners continue to bear a disproportionate share of property taxes. City Administration recommended that council adjust the Homeowners’ Municipal Tax Rate to 9.0 per cent (instead of 4.8%) and the Business Owners’ Municipal Property Tax Rate to 2.0 per cent in order to compensate this sharp tax increase by the Province.
Are you still with me?
What does this mean for business and homeowners?
First up: Administration’s proposal to increase homeowners’ property taxes from 4.8% to 9.0%.
Analysis: The impact of a 9.0% property tax increase on the typical home with a median assessed value of $430,000 would mean an increase in property taxes of $123 per year for the home owner. Accounting for the one-time rebate of approximately $100, this would result in a $23 increase. However, in 2015, the typical homeowner would see her taxes increase $123 plus whatever Council approves in 2014 as well.
This option combined with the abandoned tax room from the province would net approximately 27.6 million, of which, $17.8 million would be used to reduce the Business Municipal Property Tax from 4.8 percent to 2.0 percent. The remainder would then be used to create a $9.8 million tax room fund, and Council would have to decide how to allocate these funds. A motion was made to use the $9.8 million tax room for seed funding for affordable housing.
Give it back: City tax = 4.8% minus abandoned provincial tax of 1.5% produces a total property increase of 2.3%
Analysis: The impact of a 2.3% property tax increase on the typical home with a median assessed value of $430,000 would mean an increase in property taxes of $59 per year or $4.90 per month for the homeowner. However, when you factor in the one-time rebate of approximately $100 for the same median assessed property, this would result in an actual reduction for the homeowner of $41 on their property tax bill.
On the non-residential side, this option would result in a combined (Municipal and Provincial) property tax rate increase of 7 per cent for business owners.
Council decided to maintain the 4.8 percent Municipal Property Tax Rate increase for both business and home owners resulting in a $41 reduction on the typical home with a median assessed value of $430,000 in 2014.
How property owners can calculate the value of their $52 million 2014 rebate
Property owners can use the factors below to multiply their properties’ assessed values to calculate the approximate amount of the 2014 rebate. Please note that these factors are preliminary and will be finalized after Council approves the third reading of the Property Tax Bylaw. We don’t expect the final factors will change much but want to qualify to make sure property owners know that this is an approximation for now.
These factors are:
Residential property factor of 0.0002311.
Non-Residential property factor of 0.0001366.
Using a residential property with the median assessed value as an example, the homeowner would receive a rebate of 430,000 x 0.0002311 = $99.37. Property owners can obtain the assessed value of their property from the 2014 Property Assessment Notices that were mailed to all property owners in January.