Tuesday, January 8, 2019

One residential mill rate causes uneven property tax changes in Langley City. Find out why.

Yesterday, I posted about changes in the assessment values of residential properties in Langley City. Between last year’s assessment and this year’s assessment, the average price of a single-family house in our community increased by around 2%. The average value of townhouses and apartments (multi-family units) increased by around 24%.

These changes in assessment values have a direct impact on property tax. The follow table shows the average value of a single-family home and the average value of a strata unit in Langley City in 2017. It also shows the average City-controlled property tax that people paid per property in 2018.

Assessment Value Mill Rate Property Tax
$827,788.00 0.0025 $2,069.47
$325,616.00 0.0025 $814.04
Total: $2,883.51

The City levies property tax by determining how much property tax is needed to balance the budget, and then applies a mill rate. The mill rate multiplied by the assessment value of a property determines how much City-controlled property tax a property owner pays.

The next table shows the impact of the average change in value of single-family and strata units in Langley City in 2018.

Assessment Value Mill Rate Property Tax Change
$844,343.76 0.00231 $1,950.43 -$119.04
$403,763.84 0.00231 $932.69 $118.65
Total: $2,883.13

If the City’s budget remained the same, the City’s would decrease the mill rate to maintain the same amount of property tax collected. Because properties appreciate at different rates, on average a single-family property owner would pay less tax while a multi-family property owner would pay more tax.

This final table shows how the mill rate would be adjusted if the City wanted to increase the property tax collected by 5 percent.

Assessment Value Mill Rate Property Tax Change
$844,343.76 0.00242 $2,043.31 -$26.16
$403,763.84 0.00242 $977.11 $163.07
Total: $3,020.42

One of the challenges in BC is that municipalities are only allowed to apply one mill rate for all residential properties. This can lead to very uneven changes in property tax. Langley City has lobbied for many years to have two different mill rates, one for single-family and one for multi-family to even-out property tax changes. To date, the province has not listened.

As a note, about 50% of the property tax charged in Langley City is controlled by the municipality.

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