Property tax notices were mailed out last week in Langley and we’ve already heard of people drawing the conclusion that their taxes have increased as a result of higher property values. It’s a common misconception that an increase in property value leads to increased taxes.
Each property pays a proportionate share of the municipality’s operating budget. For example, if there was a small town with 100 properties and an annual budget of $100,000, each house would owe $1,000 (1:100th share) in property taxes.
If the values in the town increase and each house is now worth $200,000, but the city budget is still $100,000, each house would still owe $1,000.
Your taxes go up for 1 of 2 reasons:
1 - Your property’s value increases more than the other properties in the area. In the example, if your house is worth $200,000 and every other house is worth $100,000, you would owe twice as much in property tax as the other house.
2 - Most often, your property taxes, along with everyone else’s, go up each year because the municipality’s budget increases from $100,000 to $110,000. In the example scenario, each house now owes $1,100 in property taxes (assuming the property values have not changed relative to each other).
Typically, houses in a community will all follow the trend of the market, rising or falling together. There are examples of when this is not the case, but that’s a topic for another day.
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