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Turner Drake & Partners Ltd.
6182 North Street
Halifax, N.S.
B3K 1P5

Tel.: (902) 429-1811
Toll Free: (800) 567-3033
Fax.: (902) 429-1891

Suite 221
12 Smythe Street
Saint John, N.B.
E2L 5G5
Tel.: (506) 634-1811

Suite 11
109 Richmond Street
Charlottetown, P.E.
C1A 1H7
Tel.: (902) 368-1811

35 York Street
St. John's, N.L.
A1C 5M3
Tel.: (709) 722-1811

4th Floor
111 Queen Street East
Toronto, ON.
M5C 1S2
Tel.: (416) 504-1811

E-Mail: tdp@turnerdrake.com
Internet: www.turnerdrake.com

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# Monday, April 4, 2016

The Real Estate Appraisal Profession is viewed in different ways by different people. Market value estimates are seen as everything from a financial assurance to a necessary evil. Personal views are typically reflective of the benefits or consequences of the end result; negative views are often the result of misinterpretation or confusion stemming from a lack of direct involvement in the process coupled with the absence of proper explanation. Unfortunately, this has led to several common misconceptions, or myths, about Real Estate Appraisal.

Myth 1: Real Estate Valuation is the same as Real Estate Appraisal

Real Estate Valuation and Real Estate Appraisal, although similar, are not analogous in nature and, contrary to popular belief, should not always be used interchangeably. The term Real Estate Appraisal is a more general term that covers a broad spectrum of value estimates. An appraisal can be anything from an estimate of price provided by a real estate agent to a written value estimate (report) provided to a financial institution by a certified appraiser. Real Estate Valuation, however, is a systematic process which provides an independent or impartial opinion of actual market value that frequently has full legal standing. It’s a complex process that can only be performed by professionally accredited individuals. Although it’s not common practise to point out the misuse of these terms to a potential client, I always like to capitalize on the opportunity to educate my audience and differentiate between the product being offered and the process involved.

Myth 2: Assessed Value = Current Market Value

Although most assessed values are purported to reflect market value, these figures are not necessarily current. For example, in Nova Scotia the assessed value of a property for the 2016 tax year is actually determined by the market value of the property at a base date of 1st January 2014, reflecting the state of the property as of 1st December 2015 (state date). As a result, the current market value of a property could in fact be significantly different than the Assessed Value.

Myth 3: Cost to build or renovate translates into Market Value

Although the cost approach is one of the three traditional methods of valuing real estate (see Myth 7), it is not without limitations. The cost approach can provide a reliable indicator of value for properties where the buildings are fairly generic, relatively new, and have very little depreciation. In this case, the building and improvements likely reflect newer construction trends and support the level of utility demanded by current market participants. However, this approach is less reliable when the building is older and begins to suffer from depreciation, or if the building is not of a typical design or style. The misconception here is that the cost to renovate will be recovered upon sale of the asset. Unfortunately, this is not always the case. In some instances, a retrofit does not necessarily add value to the property; it simply aligns the product with current demand or economic/functional requirements. Similarly, inflated costs due to atypical building designs are not always realized by the local market. In fact, the level of “uniqueness” can actually limit the pool of potential purchasers, therefore lengthening marketing times, and potentially decreasing the achievable value.

Myth 4: Market Value varies depending on who the report is prepared for

Market value is an impartial, unbiased opinion of value. The Appraiser/Valuer has no vested interest in the final outcome of the analysis, and therefore, the final figure should be the same no matter who commissions the report (i.e. borrower, lender, etc.).

Myth 5: A paying client can share a Valuation Report with anyone, and anyone can rely on it

A customer can share the results of a valuation with anyone they please, however the only individuals or organizations that may rely on the conclusions are expressly documented within the report.

Myth 6: A Property Valuation is the same as a building inspection

Although most valuations include an onsite examination of the subject, the Valuer’s task is to render an opinion of the market value for the property. A building inspection typically constitutes a structural survey of the building in order to determine the actual condition of the structure and its major components.

Myth 7: Market Value is based solely on comparable sales

There are three traditional approaches to valuing real estate: the Direct Comparison, the Cost Approach, and the Income Approach. Only the most appropriate combination of the three approaches is utilized in order to properly value a property.

1. The Cost Approach can provide a reliable indicator of value for properties that are fairly generic, relatively new, and have very little depreciation.

2. The Income Approach can provide a reliable indicator of value for properties which are acquired as investment vehicles. The value of the property is determined by its ability to generate revenue. This approach is less reliable when applied to properties which are not likely to be rented to a tenant.

3. The Direct Comparison Approach can provide a reliable indicator of value when comparable sales data are available. This approach is less reliable when sales data is sparse or when the various sales are not truly comparable to the subject thereby requiring extensive adjustments.

Written by Mark Farrow, Senior Consultant in our Valuation Division. For more information about our valuation services, feel free to contact Mark at (902) 429-1811 or MFarrow@turnerdrake.com.

Monday, April 4, 2016 10:31:10 AM (Atlantic Daylight Time, UTC-03:00)  #    -
# Tuesday, March 29, 2016

The combined service of Turner Drake’s three most senior consultants is a staggering 110 years… and counting. Still swift of mind (if not of foot), they provide an unparalleled resource for our clients and give wise counsel to our own junior ranks. One of these senior consultants is Lee Weatherby, Vice President of our Counselling Division who is now well into his fourth decade of service with Turner Drake.

When Lee started with the company in 1981, we were operating nicely with cutting-edge typewriters, rotary-dial phones, and comfortable indoor plumbing. Already a veteran of the litigious world of expropriation, Lee was immediately able to share his training and experience with the local legal community. Over the years, he has worked alongside many lawyers, providing litigation support and forensic valuation advice. He has presented himself as an expert witness at countless trials, arbitrations, and mediation hearings, and while refusing to accept all the credit, it is worth noting that many of those who were once clients are now judges. And he was always nice to them.

Forensic valuation work is an invaluable tool when disputes arise. If you own real estate, you will have likely engaged with an irate tenant, landlord, insurance adjuster, assessor, or neighbour at one time or another. Any self-respecting lawyer will tell you that when serious disputes arise, negotiation is a far better solution than trial, and alternative dispute mechanisms are a happy middle ground for would-be combatants. Our own experience tells us that there are fewer litigants prepared to try their luck at trial, and for good reason. Inevitably, there will be some merit in both sides; when it comes to matters of real estate the challenge is to measure who has the best case and the best evidence to support it. The seasoned valuation expert will not only provide the underpinnings for your own case, but will also help to remove them from your opponent’s – presuming, of course, that your case is credible to start with. Exposing the frailties (and indeed the strengths) in your opponent will put you at a distinct advantage at the negotiating table, and greatly improve your chances of success should you decide to chance your luck at trial.

Thinking outside-the-box has long been a corporate philosophy within the halls of Turner Drake, and strategic thinking of one of the hallmarks of the Counselling Division. Challenging cases and unusual real estate assets are commonplace, and there aren’t many properties that Lee hasn’t encountered during his tenure with the company. He is never one to tire of the mundane, but tends to thrive on the more obscure challenges; from heavy water production plants to underwater burial grounds, from debunked bunkers of the cold war era to obsolete pulp and paper mills of the modern era. There is little that has not crossed his desk at one time or another and no challenge has ever been left unresolved. If you have a property that’s a real head scratcher, give Lee a call.

Lee Weatherby, Vice President of our Counselling Division. For more information about our counselling services, feel free to contact Lee at (902) 429-1811 or LWeatherby@TurnerDrake.com.
Tuesday, March 29, 2016 3:49:24 PM (Atlantic Standard Time, UTC-04:00)  #    -
# Thursday, March 24, 2016

You have just seven days left to take action to reduce your property tax load this year. The 2016 Request for Review (Appeal) period runs out at midnight on March 31st. If your property is protected by our PAMS® Property Tax Manager program, rest assured, matters are well in hand; we have already reviewed your assessment and have taken action if the opportunity exists to reduce your realty assessment. If your property is not enrolled in PAMS®, roll up your sleeves and take some time to complete your review now!

If you own industrial, commercial, or investment (ICI) property, real estate taxes are undoubtedly your largest occupancy expense and account for approximately 40% to 50% of your total operating costs. If you haven’t renovated or altered your property, odds are your assessment has not increased significantly this year. Although this may be a pleasant surprise, the reality is simply that last year’s weaker real estate market did not provide the assessment office with a statistical basis for a larger increase. In fact, even when market values are increasing, property specific issues may warrant a reduction in your assessment. So, if you are aware of any property specific issues that negatively affect your property’s value, this is an excellent time to bring them to the attention of the assessor in an effort to have your assessment reduced!

The basis for your 2016 realty assessment, as mandated by the provincial Assessment Act, is the Real & True Value of your property on 1st January 2016 (the “base date”). When you review your assessment, make sure you apply the correct test. The Courts have held that Real & True Value equals market value but the devil is in the details. Market value is a reasoned estimate of a property’s value based upon a given set of assumptions. It can vary greatly depending upon the interest being valued and can only be consistently applied if the same assumptions are applied to all properties. These assumptions are not laid out in the Act. On the contrary, they represent a culmination of directives given by the Courts along with policies set by assessment authorities. The interest to be valued is the fee simple, not the leased fee or leasehold interest. Market value is not the value to its current owner, but to any owner. Some properties are so unique or specialised that there is effectively no market requiring a unique solution to the valuation problem.

If your primary area of expertise is not property tax, there are some basic tests you can apply to determine if you should request a review. Compare your assessment to similar properties in your municipality. If your assessment per unit (per ft.² for offices, warehouses, dealerships; per room for hotels and motels; per unit for apartments) exceeds those of similar properties, the assumptions used to assess your property may be different. You should also look at the circumstances that existed on the base date of assessment (1st January 2016) to determine if there are property specific issues that would afford you the opportunity to have your tax load reduced. Factors such as declining occupancy or utilisation, declining demand for your products, and environmental contamination must all be considered in striking your assessment.

The Bottom Line: It’s decision time. If you are in any doubt as to whether you are over-assessed, you should file a Request for Review.

Action Required: File a Request for a Review (Appeal) before midnight on March 31st or forever hold your peace. If you would like some (free) advice, please do not hesitate to call our New Brunswick Tax Team, André Pouliot or Chris Jobe, toll free at 1-800-567-3033 (634-1811 in Saint John).

Thursday, March 24, 2016 2:56:28 PM (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Thursday, March 3, 2016

It’s that time of year when many Canadians are suffering from dry mouth, a stiff back, and a feeling of bewilderment and disbelief – otherwise known as “tax pain.” Residents and property owners in New Brunswick will be the next set of Canadians to experience these symptoms as their annual property assessment notice and tax bill was sent on March 1st.

The fabled “tax pain” experienced by property owners is all too real, but following these tips will help ease the pain of determining whether or not your property taxes are too high.

What is my Assessment Notice/Tax Bill?

The tax bill is composed of two elements: an assessed value and a tax rate. Service New Brunswick (SNB) calculates the assessed value based on market value: an estimate of what the property would sell for on the open market. The second element, the tax rate, is a combination of rates set by the provincial government and your local municipality. By multiplying these two elements together, you will get your annual property tax bill.

If you believe your property is overvalued when you look at your assessment notice and tax bill (and you experience any of the symptoms listed above), you have until March 31st to “seek treatment” and appeal to hopefully reduce your taxes.

What am I appealing? Is my property overvalued?

In New Brunswick, the first level of appeal is known as a Request for Review (RFR). When you file an RFR, you are challenging the assessed value of your property.

Determining if you are over-assessed can be a little tricky. It requires access to data on your property and on comparable properties. I have conducted property tax appeals all across the country and each province has the resources and technology available to assist in the collection of property information, with some provinces being more advanced than others. For example, several provinces (i.e. Nova Scotia, Ontario, British Columbia) offer online services that enable property owners to access their specific assessment calculations by inputting the associated property account and pin numbers located on their assessment notice/tax bill. Along with the assessment calculations, these provinces offer additional information including assessment history, sale prices, and mapping imagery all within the convenience of one website.

Unfortunately, New Brunswick is not yet offering a “one-stop-shop” service similar to other provinces to obtain assessment calculations and other information. This makes it difficult for property owners to determine if they are over-assessed because they do not know how their specific property value is calculated. Property owners can request their assessment calculations from SNB; however, these can be difficult to obtain during the appeal period as assessors are dealing with a large volume of paper work and inquiries.

Fortunately, there is no cost to appeal. So if you believe you are over-assessed and have not been able to obtain your assessment calculations, file an appeal before the end of the appeal period by completing the bottom portion of your assessment/tax notice and submitting it to SNB.

What resources are available to help determine if my New Brunswick property is overvalued?

Below are a few websites that are useful for gathering property information in New Brunswick:

1. Propertize.ca - Arguably the best resource when determining whether or not you are assessed fairly in New Brunswick. This website has no affiliation to SNB and was created by a local resident of New Brunswick who grew frustrated as historical assessment data was not being made readily available to the public. The website enables the user to search their assessment history as well as the assessment history and sales prices of neighbouring and comparable properties.

2. GeoNB Map Viewer - Operated by SNB, this website works by inputting a Parcel Identifier (PID) into the website search application enabling the property owner access to Geographic information. This information can assist in determining parcel shape, building outline, lot size, and other value-added applications. It is possible to use GeoNB without searching by PID, but it can be difficult to navigate and find the appropriate parcel. As well, the aerial imagery in some areas of the province are out-of-date or not available, so be careful when searching for comparable properties as some buildings may no longer exist or may have been renovated. Overall, this is a helpful website in gathering information to determine if your property is overvalued as parcels throughout the province are identified.

3. Property Online - Operated by SNB, this website has three search features: by Property Account Number (PAN), by PID and by location. The free version of this website does not offer much else in terms of information like the other sites above. However, the subscription-based website provides many more features including mortgage information, deeds, and site plans.

How can I use this information to determine if I am over-assessed?

By combining the information obtained from these resources you can get a sense of where your property falls in relation to neighbouring and comparable properties based on such things as:
• Percentage increase of assessment
• Assessment per ft2 of building
• Assessment per ft2 of lot size

Keep in mind that arguing your property is unfairly assessed in relation to your neighbours is not a sure-fire bet for a reduction, as there is no statutory requirement for assessments in New Brunswick to be uniform. Determining that your property might be over-assessed is the first step, but the assessor typically requires a proper position using one of the three approaches to value (Income, Cost, and Direct Comparison). In order to achieve a reduction, the assessor requires a proper inspection of the property, market data, and a list of facts and issues about the property that were not previously accounted for.

Written by Chris Jobe, Manager of our Property Tax Division. If you have any questions about your property tax assessment, feel free to contact Chris at (506) 634-1811 or CJobe@turnerdrake.com.

Thursday, March 3, 2016 10:30:38 AM (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Wednesday, March 2, 2016

If you own property in New Brunswick, your 2016 assessment notice and tax bill is in the mail and will land on your desk within the next couple of days. It is dated the 1st of March, and unless your property is enrolled in our PAMS® Property Tax Manager program, you have work to do! You have just 30 days from the date your notice was mailed to review your assessment and decide if you will take action to reduce your tax burden this year.

New Brunswick tax payers are being asked to make additional sacrifices this year. The HST rate is increasing from 13% to 15%, reaching deep into consumers’ pockets and leaving businesses that rely on consumer spending with a smaller pie to compete for. The corporate income tax rate is on the rise and will increase from 12% to 14% (an increase of 16.7%) this year. The reward for these sacrifices is a budget deficit of $347 million this coming year, a provincial debt that will rise to $13.4 billion by the end of the fiscal year, and a projection of a balanced budget… in 2021! We’ve seen this movie before.

Do not despair! Opportunity knocks! Although it’s the tax man who reviews your self-assessment of your consumption and income taxes, the New Brunswick Assessment Act gives you the authority to review and provide your input on the tax man’s estimate of your property tax assessment.

The basis for your 2016 Realty Assessment, as mandated by the provincial Assessment Act, is the Real & True Value (a.k.a. market value) of your property on the 1st of January 2016 (the “base date”). Market value and “value to the owner” are not the same thing. Do not fall into the trap of asking yourself “at what price would I be willing to sell?” or in estimating your property’s value as an input to the going concern value of your business. Ask instead what others would be willing to pay if the property was offered for sale. Ignore value attributable to leases if your skill as an entrepreneur has allowed you to outperform the market in terms of rental and or vacancy rates and ignore the value of any speculative or hypothetical uses of the property.

Market value then is the first test: if your Realty Assessment exceeds your property’s market value on the 1st of January 2016, it is over-assessed and you should file an appeal. If not, try applying our unofficial uniformity test. While the New Brunswick Assessment Act does not contain a uniformity provision (i.e. require that assessments bear a fair relationship to one another), there are circumstances where assessors can be convinced that such should be the case. Multiply your property’s market value by the general level of assessment prevailing in your municipality. In our experience, these levels are usually in the range of 75% - 90%. If you’re still not sure, try comparing your assessment on a unitised basis to similar properties. If the resultant figure is less than your assessment or you are assessed at a higher rate than other properties you may be able to secure a tax reduction this year.

The Bottom Line: The Assessment Act empowers you to have a say in what your 2016 property taxes will be. Speak now or forever hold your peace!

Action Required: Review your 2016 assessment and file an appeal if there is an opportunity to reduce your assessment. Not sure? Contact our New Brunswick tax team, André Pouliot or Chris Jobe at (506) 634-1811 (Saint John) or 1-800-567-3033 (elsewhere).

Wednesday, March 2, 2016 11:08:32 AM (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Friday, February 19, 2016

The Property Valuation Services Corporation (PVSC), formerly the provincial assessment department, is going boldly where it has gone before… demanding that property owners hoist themselves with their own petard. It is doubly ironic that property owners are required to pay for the cost of PVSC by way of a levy on their tax bill… and then are expected to do much of its work for it by downloading, printing and then completing its Income and Expense Questionnaires. While disregarding the request is poor strategy, completing it has its dangers too. PVSC will use the information it gleans from the Questionnaires to assess property for the 2017 taxation year. If your property is currently under-assessed, it is tempting to ignore the request in the hope that this happy circumstance will continue. Unfortunately, failing to file the Questionnaire can send a clear signal to PVSC that you think you are undervalued. Far from keeping you out of sight, it has the opposite effect. And it gets worse. In the absence of a completed Questionnaire, PVSC will use its own data, unimpeded by your property’s factual income and expenses, to calculate its assessment… and you will be left without recourse, as the penalty for failure to comply with the request will be loss of 2017 appeal rights. We recommend therefore that you complete and file the Questionnaire, but with your audience in mind. Comfortably cushioned from the vicissitudes of tenant selection, rental negotiation and collection, and things that burst in the night, PVSC will happily accept at face value your rental income, unless it appears to be too low… and gaily disregard expenses they consider to be above the norm. Do not expect them to empathise with your sweat and tears, services you undertake yourself to minimise costs, unless you monetise them. Nor should you expect increased maintenance costs - inherent, for example, in a single bedroom apartment building with a transient population - to strike an echoing chord. Expect PVSC to discount these as “outliers,” or your management and administration costs as “excessive,” unless you explain the nuances of revolving doors and are prepared to supply provenance. Tenant inducements and management efforts to maintain occupancy are concepts unfamiliar to the cozy world of PVSC. You will have to quantify them. If your building contains office, retail or industrial tenancies, be careful how you describe your leases; the subtleties of “net” versus “gross” lease terms may not be fully understood by PVSC.

Further complicating this year’s round of requests is the fact that it is being made almost a full fiscal quarter earlier than is customary. For 2016, and for the recent past, assessments reflect a property’s market value as of a date two years in the past (called the base date). In an effort to produce assessments that are more current, PVSC is shifting the base date to reflect market values one year in the past. This means that assessments provided to property owners in January 2017 will reflect a property’s market value as of January 1, 2016. With this shift comes a requirement to analyse income and expense information earlier in the year…so early, in fact, that owners with December year-ends may not yet have 2015 statements completed. Any owner in that predicament should provide the most recently-available information, because the PVSC has no legislative authority to extend the 30-day deadline.

The Bottom Line: Download the appropriate Questionnaire from the PVSC’s website at www.pvsc.ca. Complete it with caution; your responses may be misinterpreted. Return it to PVSC by 17th March.

Action Required: If your property is enrolled in our PAMS™ Property Tax Manager program, let us review your completed Questionnaire before you return it to PVSC. Our Lead Consultant assigned to protect your property will be pleased to provide you with assistance in completing the Questionnaire. If you are not yet a PAMS™ client, and would like assistance in completing the Questionnaire, please call our Nova Scotia Tax Team, Giselle Kakamousias, Mark Turner, or Greg Kerry at 1-800-567-3033 (902-429-1811 in HRM).

Friday, February 19, 2016 12:27:08 PM (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Tuesday, February 2, 2016

If you own a residential property in Nova Scotia you may have noticed recently when you received your assessment notice that there are two values assigned to your assessment; the market value and the capped value.  If you've lived in your home for a few years now, you will have also noticed that your capped value is lower than your market value. You might be thinking that you are benefiting from the capped value, but in reality for a lot of people those savings are what we call "phantom savings".  The Capped Assessment Program (CAP) was introduced in 1995 in order to protect homeowners from rapid and sudden increases in assessment values. The CAP was implemented in response to concerns from families and seniors worried about not being able to afford higher property tax bills as a result of higher assessment values. It sounds like a great idea, but there are some major flaws in the program.

One the biggest issues with the CAP is that it doesn't discriminate between homeowners with high levels of wealth or lower levels of income. The property owner who hasn't seen much of a rise in the market value of his or her property will end up having to pay higher tax rates in the long run in order to subsidise the properties which have increased significantly in value but are only paying taxes on a much lower capped value. The problem will only get worse over time.

The longer the program remains in place, the more distorted the assessment base becomes. Assisting those who can least afford to pay their property taxes would be better served with more targeted efforts such as credits and deferral programs. Allowing seniors to defer a portion of their property taxes when their assessment values increase will allow them to stay in their homes longer and once their homes are sold the outstanding taxes can then be repaid. Some people believe that it's important to continue using the capping program because taxpayers benefit from lower property taxes. This is a gross misconception however. Every year municipalities need to collect a certain amount of revenue in order to fund their budgets. Property tax collection is the main source of revenue for municipalities and whether everyone has a high assessment value or a low assessment value, the tax rate needs to be adjusted accordingly in order to generate the necessary amount of revenue. If we lower one of the factors, the other must go up and vice versa.

Property Taxes = Assessed Value (or Capped Value) x Municipal Tax Rate

The result is that for many properties, a reduction in the assessed value via the cap simply results in a higher tax rate and a shift in the tax burden to properties which are ineligible for the cap. The CAP is not producing the outcomes that it was designed to do, and I'll provide a simplified example to illustrate one of the problems with the program.

In our example, the municipality consists of many different neighbourhoods with all different types of properties, but we’re going to narrow our focus and make the assumption that there are only two types of houses that will fall under the CAP criteria and all other properties are assessed at their market value. The two types of capped homes are each in a different neighbourhood; we’ll call them Home A and Home B.
  The people that live in the neighbourhood with home type A are mostly seniors and families that have lived in the area for a long time. These are older homes that haven't been renovated in years. The people that live in the neighbourhood with home type B are younger working age people who all built brand new homes in a new up-and-coming neighbourhood back in 2007. As of 2007, both home types had a market value of $200,000.   

The people that live in Home A have seen the market value of their property rise at an annual rate of 3% which is slightly above the capped rate while the people that live in Home B have seen an annual increase of 8% in the market value of their property which is much higher than the capped rate of growth. While homeowners in both house may be thinking that they are benefitting from the CAP, in reality the people living in House A (i.e. seniors) are having to pay property taxes at a higher tax rate in order to subsidise the lower capped values of the working age people in House B.

The table below shows that the taxable value of both house types is $237,000 and produces tax revenues of $2,867.70 per house on a rate of 1.21%. If we were to remove the CAP, the tax rate could actually be lowered to 0.87% and the people living in Home A would actually pay less property taxes while people in Home B would pay more.

While there are people out there who are benefitting from the CAP, the program has serious flaws and is creating distortions in the assessment base. For more information on the CAP, I encourage you to check out the Final Report on Municipal Property Taxation by the Union of Nova Scotia Municipalities which can be found on their website. 

Written by Mathieu Chaput, Consultant in our Property Tax Division. If you have any questions about your property tax assessment, feel free to contact Mathieu at (902) 429-1811 or MChaput@turnerdrake.com.  
Tuesday, February 2, 2016 4:45:09 PM (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Monday, February 1, 2016

There are just 7 days left in which to appeal your 2016 property tax assessment ... or forever hold your peace. The Property Valuation Services Corporation (PVSC), the municipally controlled body responsible for tax assessment throughout the province, mailed out your Assessment Notice on January 8th. The appeal period ends at midnight on February 8th. If you have enrolled your property in our PAMS™ Property Tax Manager program, PVSC have already sent us an electronic copy of your Assessment Notice enabling us to review your assessment and file an appeal if the opportunity exists to reduce your tax burden. If you do not have PAMS™ protection, and have not yet asked us to review your Assessment Notice, you should do so now. The 2016 increase experienced by many property types is lower than that of years past, however the decision to appeal/not appeal should never be based solely on a single years change in value. Most property types are assessed 25% to 30% higher than five years ago. You should be vigilant in your efforts to manage your tax load and take every opportunity to minimise your assessment.

The basis for your Year 2016 assessed value is your property’s Market Value on 1st January 2014 (the “base date”) but having regard to its physical state on 1st December 2015 (the “state date”). In practice these criteria are oft stated by PVSC in defence of its assessed values, but in our experience property is often assessed at less than its market value perhaps because supporting sales data is not available, or to discourage appeals. (There may be legitimate reasons too for assessing a property below its base date sales price; for example, if the property had lost a major tenant by the state date). Of course it would not matter if all property were under-assessed by the same percentage amount, but such is not the case. Fortunately the Assessment Act does provide protection against such shenanigans by including a requirement that all properties in the municipality be assessed in a uniform manner. Case law has determined that uniformity is achieved by calculating the “General Level of Assessment” within the municipality, by property category (commercial or residential). The General Level of Assessment is the ratio of the 2016 assessment to the property’s 1st January 2014 Market Value. This can only be achieved by totalling all of the 2016 assessments, for those properties whose sales occurred between 1 st July 2013 and 30th June 2014, with the aggregate of their sale prices. Sales data is now publicly available; however, its format and accessibility is fairly limited. PVSC usually insist that their General Level of Assessment is 95% to 100%. This is rubbish: base your calculations on 80% and file an appeal if the assessed value of your commercial, industrial or investment property > 80% x Market Value (@ 1st January 2014). Exclude the HST from the market value. (We have built an information technology platform Compuval™, and have populated it with sales, assessment and rental information. It allows us to calculate Market Values and gives us a broad indication of the true General Level of Assessment. The quantity of sales data varies by municipality since we gather it from multiple sources, so we have built capability into CompuVal® to run a variety of analyses comparing your property with others in its peer group).

The Bottom Line: If your Realty Assessment > [(Market Value as of 1st January 2014) x (General Level of Assessment)], you are over-assessed. The real General Level of Assessment is probably between 0.8 and 0.9 in most municipalities.

Action Required: If in doubt, appeal ... or contact our Nova Scotia Tax Team, Mark Turner, Giselle Kakamousias or Greg Kerry at 1-800-567-3033 (429-1811 in HRM).

Monday, February 1, 2016 4:40:28 PM (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Monday, January 11, 2016
If you own property in Nova Scotia, you have probably now received your annual Assessment Notice from the municipally-owned and controlled assessment authority, the Property Valuation Services Corporation (PVSC): it was mailed on Friday, 8th January. Resist the urge to light it on fire, and review it carefully… or risk being unpleasantly surprised (and without recourse!) when your tax bill arrives later this year.

The 2016 appeal period was a scant few hours old on Friday when the PVSC began trumpeting the fact that its average 2016 property assessment increase is only about half of 2015’s. Don’t be lulled into a false sense of security by an assessment that has only increased marginally, remained unchanged, or even declined - particularly in secondary centres and rural locations. Leaving the assessment unchanged is a strategy routinely employed by assessing authorities to discourage appeals. The PVSC is undoubtedly hoping that Nova Scotian taxpayers have short memories, because in spite of a more moderate 2016 rise, assessments have increased by between 20 and 25% over the past five years … and by 30 to 35% in Halifax (where over 50% of Nova Scotia’s assessment base is situated).

And, the comparatively temperate rate of 2016 increase reported by the PVSC (which, of course, is only an average) will be of hollow comfort to property owners who have experienced unforeseen, double-digit increases in value. Early indications are that apartments, retail property, and income-producing industrials have been particularly hard hit for 2016.

The basis for your 2016 Realty Assessment, as mandated by the provincial Assessment Act, is the market value of your property on 1st January 2014 (the “base date”), having regard to its physical state on 1st December 2015 (the “state date”) and the assessments of the other commercial properties in the municipality (the “General Level of Assessment”). Market value then is the first test: if your realty assessment exceeds your property’s market value on 1st January 2014, it is over-assessed and you should file an appeal.

The second test to apply is the General Level of Assessment (“GLA”), calculated by dividing the sum of the 2016 assessments of those properties that sold between 1st July 2013 and 30th June 2014, by the aggregate of their sale prices. PVSC has, on occasion, (and only when prodded!) condescended to divulge their General Level of Assessment. On the occasions where we have formally reviewed PVSC’s calculations, they’ve often proven to be nonsense. It would be reckless in our view, to place any reliance on PVSC’s General Level of Assessment ... which it usually insists is 95% to 100%. A more realistic figure is 80% to 90%. So if your investment, commercial or industrial property’s assessment is greater than 80% of its base date market value, file an appeal.

The Bottom Line:
You may have to pay taxes ... but you don’t have to leave a tip.

Action Required:
If you are in any doubt that your property is over-assessed, you should file an appeal on or before 8th February 2016. You will not get another opportunity this year. If you wish, we can file the appeal for you. If you would like to discuss your property assessment with us before you file an appeal, call our Nova Scotia Tax Team, Giselle Kakamousias, Mark Turner, or Greg Kerry at 1-800-567-3033 (429-1811 in HRM).

Monday, January 11, 2016 4:00:48 PM (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Monday, December 21, 2015

You have just 10 days left to reduce your property tax burden for 2016.  The appeal period expires at midnight 31st December.  A successful appeal now is a gift that keeps on giving . . . since this is the first year of the tri-annual re-assessment cycle, the reduction in your assessment will continue through three full years.


Commercial property assessments increased by an average of 21.4% for next year in St. John’s.  This would not matter if municipalities exercised the same fiscal restraint as the private sector and held the line on spending.  They would then be able to drop the tax rate by a commensurate amount.  Unfortunately this does not happen:  the temptation is just too great.  Initially they tend to reduce the tax rate somewhat but then it rapidly regresses to its pre-assessment level.  Our research clearly shows that municipalities quickly expand their spending to take advantage of their “increased fiscal capacity”.  For most commercial properties, realty taxes are second in line only to debt service as a percentage of the rent.  Irrespective of whether you pay the taxes directly or recharge them to your tenants, property taxes have a direct impact on your bottom line since tenants will ultimately seek rent relief if their gross rent, including taxes, falls out of line with competing properties.  Be proactive, property taxes should be managed like any other expense.  Effective property tax management requires a solid understanding of the assessment process.


The basis for your Year 2016 assessed value, is your property’s Market Value on 1st January 2014 (the “base date”).  In practice the market value requirement is often cited by the City of St. John’s Assessment Division and other assessment authorities in defence of their assessed values, but in our experience property is often assessed at less than Market Value to discourage appeals.  Of course it would not matter if all property were under-assessed by the same percentage amount since the tax load would still be distributed equitably:  but such is not the case.  Fortunately the Assessment Act does provide protection against such shenanigans by including a requirement that all properties in each municipality be assessed in a uniform manner ... so like properties should carry similar assessments.  In practice it is not quite this simple:  you have to compare the sum of all commercial assessments in the municipality with their aggregate market value ... a herculean task unless you have access to the City of St. John’s Assessment Division database.  Since they are unlikely to be that generous we have compiled our own database to assist you.  We can also run a variety of analyses comparing your property’s assessment with others in its peer group.


The Bottom Line:  You should appeal if your property is assessed at more than, (1) its Market Value on 1st January 2014, or (2) the assessment of other, comparable properties ... or if you harbour any doubt that your property is over-assessed.


Action Required:  None, if your property is enrolled in our PAMS® Property Tax Manager program.  If it is not and you file an appeal, be careful not to restrict your grounds of appeal.  We recommend that you use the following wording: “The assessment is excessive, unfair, not uniform with other assessments, and any other grounds that may appear.  Praise the Lord and pass the ammunition.”  If you prefer we will file the appeal for you.  If you would like advice on whether to appeal, call our Newfoundland Tax Team, André Pouliot or Mark Turner at (709) 722-1811 (St. John’s) or 1-800-567-3033 (toll free) and pick their brains.

Monday, December 21, 2015 10:20:52 AM (Atlantic Standard Time, UTC-04:00)  #    -
Newfoundland & Labrador | Property Tax