REASSESSMENT MARKET UPDATE IMPACT 2017 Tax Year Year 1 of 4 of the Assessment Phase-in & Relative Tax Impact General Committee, February 6, 2017
2 AGENDA 1. REASSESSMENT FOUR YEAR MARKET UPDATE (2017 2020) 2. 2017 MARKET UPDATE CITY IMPACT SUMMARY 3. PROPERTY TAX IMPACTS 4. SUMMARY
3 1. REASSESSMENT FOUR YEAR MARKET UPDATE (2017 2020) MPAC is responsible for assigning a current value assessment (CVA) for all properties The CVA of a property is based on a valuation date of January 1 st, 2016, which was updated from January 1 st, 2012. Properties that have increased in value will have the CVA increase phased-in by 25% in each of the four years of the current reassessment phase-in cycle (2017 2020) Properties that experience a decrease in CVA will realize the change immediately in the first year of the reassessment cycle (2017) 2017 tax year marks the first year in the current phase-in cycle (2017-2020) Combination of the reassessment and the annual updates completed by MPAC equate to the results in the market update
4 1. REASSESSMENT FOUR YEAR MARKET UPDATE (2017 2020) In 2016, every property owner in the City of Markham received an updated property assessment notice from MPAC, which provided the reassessment values for their property over the four-year taxation period (2017 2020) In Year 1 of the reassessment cycle there are three types of properties: 1. Properties with an assessment increase; 2. Status quo properties (no change in assessment); and 3. Properties with an assessment decrease
5 1. REASSESSMENT FOUR YEAR MARKET UPDATE (2017 2020) Example of the four-year assessment phase-in program Property Type 2016 Full Assessment 2017 Full Assessment Market Increase 2017 Phased-In Assessment (Tax Year) 2018 2019 2020 Increasing Property 500,000 600,000 100,000 525,000 550,000 575,000 600,000 Decreasing Property 500,000 400,000 0 400,000 400,000 400,000 400,000 Properties that increase will have the assessment value phased-in by 25% in each of the four years of the cycle. Properties that experience a decrease in assessment value will realize the reassessment change immediately in the first year of the cycle. It is important to note that the City average assessment increase of 9.79%, is weighted by both increasing and decreasing assessments
6 2. 2017 MARKET UPDATE- CITY WIDE IMPACT SUMMARY 2017 City average assessment change Property Class Overall Reassessment Impact (2017 2020) 2017 Impact (Year 1 of 4) Residential 44.00% 11.07% Commercial 17.57% 4.01% Industrial 12.93% 2.35% Multi-Residential 25.34% 5.99% Farm 22.81% 5.56% Managed Forest (3.49)% (4.02)% Pipeline 9.66% 2.42% Total Taxable 39.62% 9.79% 1. Properties that have increased more than the City average will experience a tax increase 2. Properties that have increased at the City average will experience no change 3. Properties that have increased less than the City average will experience a tax decrease
2. 2017 MARKET UPDATE- CITY WIDE IMPACT SUMMARY Average CVA change for residential homes in Markham Property Type Property Count # 2016 Average CVA 2017 Average CVA Average Change in Phased CVA (2016-2017) % Single Detached 52,412 722,844 809,471 86,626 11.98% Link Home 13,068 485,803 543,988 58,185 11.98% Freehold Townhouse 8,340 458,869 509,627 50,758 11.06% Semi-Detached 6,164 467,601 519,856 52,255 11.18% Residential Condominium 18,611 347,824 364,454 16,630 4.78% Residential Homes 98,595 582,350 646,811 64,461 11.07% Below or Above City Average (9.79%) 1. 4 out of the 5 residential homes types will experience a property tax increase as they are above the City average of 9.79% 2. Average residential condominiums will experience a tax decrease as they are below the City average 3. Average residential homes in Markham will experience property tax increase as they are above the City average 7
8 2. 2017 MARKET UPDATE- CITY WIDE IMPACT SUMMARY Average CVA change for residential homes by ward Ward 2016 Average CVA 2017 Average CVA Year-Over-Year Change % 1 624,976 688,893 63,917 10.23% 2 719,422 805,851 86,428 12.01% 3 607,456 676,324 68,867 11.34% 4 545,350 605,924 60,574 11.11% 5 512,921 564,849 51,928 10.12% 6 627,908 702,329 74,421 11.85% 7 558,119 621,690 63,571 11.39% 8 474,684 523,986 49,302 10.39% Average Residential Home 582,350 646,811 Below or Above City Average (9.79%) Based on the City average of 9.79%, average homes in all wards will experience a tax increase due to the market update
9 3. PROPERTY TAX IMPACTS Tax Impact Example Due to Market Value Update Tax Year CVA Tax Rate % 2016 589,135 0.197612% 1,164 2017 646,811 0.180242% 1,164 Change % 9.79% -8.91% 0.00% Tax Tax Change 0 The 2017 market update in phased CVA for this example has been increased by the City average of 9.79% The 2017 tax rate is decreased to ensure the City collects the same amount of property tax as it did before the reassessment Tax impacts as a result of the market update are independent of the annual budget process
3. PROPERTY TAX IMPACTS Illustration of Tax Impact due to Market Value Update 2016 Phased CVA Value 2017 Phased CVA Value Change in Phased CVA % (Average City of Markham 9.79%) Property Tax Impact - As a result of the Change in Phased CVA (2016 vs. 2017 Phased CVA) Impact on City share of Tax Only (2016 to 2017) 589,135 659,831 12.00% 12% is greater than the 9.79% City-wide average; therefore this property experienced an increase in property tax due to reassessment. (12.00% - 9.79% = 2.21%) +23 589,135 646,811 9.79% 9.79% is the same as the 9.79% City-wide average; therefore this property will not experience a change in property tax due to reassessment. (9.79% - 9.79% = 0.00%) 0 589,135 618,592 5.00% 5% is lower than the 9.79% City-wide average increase; therefore this property experienced a decrease in property tax due to reassessment. (5.00% - 9.79% = (4.79%)) -51 10
11 4. SUMMARY The 2017 tax year marks the first year of the current phase-in cycle The City-wide average increase between the 2016 and 2017 tax years is 9.79% The average residential home in Markham will experience an increase in property tax due to the market update, as they are above the City-wide average increase of 9.79% The average residential condominium will experience a tax decrease as they are below the City-wide average increase of 9.79% The commercial class increased by 4.01% and the industrial class increased by 2.35% between 2016 and 2017. The average commercial and industrial property in all wards will experience a tax decrease as they are both below the City-wide average of 9.79% Tax impacts due to reassessment and the phasing in of assessment are independent of the City s annual budget process
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