In this article we cover everything that you need to know about assessed value. This includes:
- What is assessed value?
- Who sets the assessed value in Quebec?
- How assessed value is calculated
- Assessed value vs appraised value: what’s the difference
- Frequently asked questions
What is assessed value?
Assessed value is the value a government authority (usually a city or municipality) assigns to a home or other piece of real estate for property tax purposes (and, in Québec, for things like the land transfer tax). It is not necessarily the same as the most recent purchase price of the property or its fair market value.
Who sets the assessed value in Quebec?
In Québec, a municipal assessor or assessment authority sets the assessed value. The assessed value updates under a triennial roll. This means that the authority updates it once every three years.
In Quebec, the municipal assessor is a member of the Ordre des évaluateurs agréés du Québec (OEAQ) and they hold the title Évaluateur agréé (E.A.). It is a regulated profession, similar to engineers or accountants The assessor must follow professional standards and a code of ethics. Outside of Quebec, requirements will differ.
How assessed value is calculated
A municipal assessor normally calculates the assessed value using a mass appraisal model. This is a computer-assisted mass appraisal (CAMA) model that uses comparable sales data and municipal records (size, year built, zoning and renovation permits) to automatically determine the price of a property. The assassors will not physically visit the property to inspect them unless:
- Someone recently built the property.
- There was a major renovation or addition
- The owner requests a review or appeal
- The assessor has missing or conflicting data
Even then, the assessor will normally just inspect the property from outside and will not inspect the interior of the property. Interior inspections do happen, but these require notice and permission. Because inspectors do not physically enter the property, errors can happen. For instance, overstated square footage, renovations assumed but not done, incorrect condition grading and so on.
Assessed value vs appraised value: what’s the difference
Although they sound similar, homeowners and authorities use assessed value and appraised value for different purposes, and appraisers and assessors determine them in very different ways.
A government authority sets the assessed value. The authority uses it to calculate property taxes (and, in Québec, the land transfer tax). Assessors determine it using a mass appraisal model based on comparable sales and municipal records, and they update it on a fixed cycle (in Québec, every three years). Because of this process, the assessed value may not reflect the property’s current condition or today’s market.
Unlike the assessed value, which assessors calculate on a fixed cycle, a homeowner or lender orders the appraised value on demand, and a licensed professional appraiser determines it. Appraisers use it for mortgages, refinancing, estate planning, and private transactions and, they base it on a property-specific analysis. Appraisers also inspect the property’s interior and exterior as part of this process.
Often the assessed value and the appraised value will not match. This is because the assessed value lags the market. Municipal models are also mass assessment models and therefore cannot be as accurate as an appraisal ordered for a specific property.
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