We frequently are asked from home owners (as well as some buyers) what is the difference between an appraisal and the assessment value of a property? Why isn’t the value of my market evaluation St. John’s home the same as my St. John’s property assessment?
The two are completely different and are used for different reasons. They have no correlation to each other at the current time.
St. John’s Property Assessment Value
The municipality you live in will have an assessed value on your home. The property value is how the municipality calculates the annual property tax. Assessment figures however, are nothing more than a gauge or price line guide for a city or town to collect an appropriate amount of taxes from those that reside in the community.
The official nature of may encourage homes owners to rely on the assessed value of their home for pricing purposes, which would be a big mistake. Real Estate assessed value consequently has no correlation to current market value.
It seems like one of the biggest problems with assessed value is that it is often not current. Municipalities will usually assess value once every 1-3 years. Our St. John’s real estate market can change substantially during this time frame. VERY rarely is your property assessment value over the appraisal or market value. As of 2017 figures this is actually FACT due to the base year being 2014 and the real estate market decreasing since then. If your assessment if over your market value you have the for a reassessment of your home.
In St. John’s The ‘Assessment Act 2006’ is the legislative authority governing assessment and taxation in the City.
How are the property taxes calculated in St. John’s?
For the taxation year 2017, residential property tax is calculated at the rate of 7.8 mils, or 0.78 per cent of a property’s total assessment. Therefore a property with a total assessed value of $100,000 would be charged an annual property tax of $780, calculated as follows:
Assessed Value = $100,000
X Mil Rate = .0078 (7.8 Mils)
Annual Tax = $780
Furthermore the water tax portion is a separate flat rate of $585 / yr
To search for your property assessment value for St. John’s click here.
St. John’s Appraisal Value
An appraisal is a method of valuation that compares similar properties in a similar area usually within a shortened time frame. This is similar to a REALTORS® Comparative Market Evaluation (CMA) but not as in-depth. While both are using essentially the same information, they can vary depending on the property, location and appraiser/REALTOR®. Sellers can be very fixed on this figure, especially when it benefits them. (think refinancing) The problem with a high appraisal value is that it can be an unreliable means of what the value really is today’s market. Nothing worse then over pricing your home to list. Just because you have listed your home with the an appraisal in place or not, true market value is what a buyer is willing to give and a seller is willing to accept.
If you have any questions please contact me and I will be more then willing to assist you.