As of late, newspaper columns, radio shows, and even office coffee breaks between colleagues can’t seem to get enough of the topic of skyrocketing property values in Quebec.

In the last few weeks, property values have surged in Montreal and in 115 cities and municipalities that have introduced new property assessment rolls, notably soaring because of the real estate boom of the last two years since the pandemic.

On the island of Montreal alone, the new assessment roll, which will come into effect on January 1st, 2023, for a period of three years, shows an increase of 32.4%.

It is important to note that the percentage increase in property assessment will not necessarily be proportional to the increase in property taxes. The impact of the increase in property values will be spread over the three-year period of the assessment roll. Rest assured, as a result, municipal taxes are not expected to increase as much as property values. The City of Montreal’s budget and tax rates for the year 2023 will officially be unveiled and adopted on November 29^th. Other cities and municipalities will have to wait a few weeks for their respective budget and tax rate rollouts.

To determine said tax rate applicable to a property, municipalities will first assess their budget and the property revenues they can expect, then divide the total by the property values[1]. This should result in rates that are lower than the average of 32.4 % and lessen the shock to property owners of cities and towns.

The inflation rate which is currently hovering around 7% in Quebec and the constant increase in the policy interest rate with hopes of reducing inflation and preventing a recession (which is subject to change on December 7^th, 2022) will undoubtedly increase the tax burden on homeowners[2].

How is the roll property value determined?

The value of the assessment roll is its exchange value on the open and competitive market on a given reference date under the Act Respecting Municipal Taxation[3]. In other words, it is the most probable price that can be paid in a private sale. For the 2023-2025 assessment roll, the reference date is July 1^st, 2021, which is the date the municipal appraiser uses to determine the value to be listed on the roll[4]. To determine the value established at said date, the appraiser considers the assessment unit of the last triennial roll and the real estate market on that specific day. Remember that only a few months ago, properties were being sold over the asking price, often in overbidding scenarios, which had a direct impact on the assessment value at the time of the reference date.

The current reality is that the new roll is being implemented at a time when the real estate market is not what it was in July 2021 and many homeowners may decide to challenge the assessment notices as they are not representative of reality.

Dispute the value now?

As mentioned above, the significant increase in the value of assessment units does not amount to an identical increase in the tax notice that will be released shortly. There is no sense of urgency to file an assessment roll value review for as long as the tax impact on your property remains unknown. If you still believe that the assessment does not reflect the true value of your property on July 1^st, 2021, it should be worthwhile to request a review!

For example, in the City of Montreal, it costs $300 to dispute the assessment for properties valued between $500,000 and $2,000,000. Moreover, hundreds of dollars must be accounted for as expert fees from a certified appraiser to support the claimed decrease in value. The assistance of a certified appraiser is not mandatory but is strongly recommended to substantiate the reasons for a request for revision.

Before submitting a review, it is important to know if it is worth the effort.

The deadline for filing a request for review is April 30^th, 2023. This is one deadline that cannot be missed. Once it has passed, there is no longer any way to contest your assessment roll, unless you are subject to the exceptions in the Municipal Taxation Act. We invite you to read our article on the procedure to follow if you wish to contest the entries in your assessment notice.

If you have any questions regarding municipal taxation, particularly with respect to your requests for review, do not hesitate to contact the Beauregard Avocats team.

[1]     Préparation du budget 2023, Finances et fiscalité, ministère des Affaires municipales et de l’Habitation (mamh.gouv.qc.ca/finances-et-fiscalite/information-financiere/preparation-du-budget-2023/).

[2]     Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening, press release from the Bank of Canada on October 26^th, 2022 (https://www.bankofcanada.ca/2022/10/fad-press-release-2022-10-26/).

[3]     Act Respecting Municipal Taxation, RLRQ, c. F-2.1.

[4]     Ibid, art. 46.