The fact that the assessment of your property increases by 34.8% under the new assessment roll, as is the case with the City of Montreal, does not mean that your municipal tax bill will increase by the same amount.
When a new three-year roll comes into force, it is customary for towns and municipalities to lower their tax rate when there is a strong increase in property value.
Take the average increase of 34.8% in the value of Montreal properties. The mayoress, Valérie Plante, in concert with her municipal council, could decide not to raise the tax bill despite the increase in the property value.
Concrete example in Montreal
As an example, let’s say that the co-ownership of “XYZ” was valued until now at $360,000. And that it has been reassessed at $485,000 for the purposes of the new assessment roll which will come into effect on 1is January 2023.
On the 2022 tax bill, the general property tax rate in Montreal was $0.5712 per $100 of assessment. The amount of property tax that XYZ paid in 2022 on his $360,000 condo was therefore $2056.32. (The formula: 0.5712 x 3600 in $/100 valuation = $2056.32).
Given the new assessment of the co-ownership at $485,000, it would be enough for Mayor Plante to reduce the tax rate in 2023 to $0.4240 per $100 of assessment for the amount of property tax to remain in 2023. identical to the one paid in 2022.
Indeed, with this rate reduced in proportion to the increase in the value of its property, XYZ would have to pay in 2023 the same amount as in 2022, namely $2056.40. (The formula: 0.4240 x 4850 in $/$100 valuation = $2056.40).
But concretely speaking, it is certainly not such a reduction in the property tax rate, ie from 0.5712 to 0.4240 per $100 of assessment, that the administration of Valérie Plante will apply.
With reasonable inflation
Given inflation, the City of Montreal might want to increase its tax revenues in 2023, say around 5%. This would be a compromise between the inflation forecasts in Quebec for 2022 (+6.5%) and for 2023 (+3.2%).
If the City opted for a 5% increase, the general property tax rate would then increase from 0.5712 (in 2022) to 0.4452 (in 2023) based on the new assessment roll.
If this were the case, XYZ would find itself in 2023 having to pay a general property tax bill of $2159.22, which is $102.82 more than in 2022. The formula: 0.4452 x 4850 in $/100 $assessment = $2159.22.
So much for the general property tax.
To this will be added the special water tax, the “old city debt rate”, the taxes of the boroughs. All the rates of these other taxes will have to be revised with the entry into force of the new assessment roll.
Elsewhere in Quebec
It’s not just in Montreal that a new property assessment roll comes into effect on 1is next January. This new role will cover the years 2023, 2024 and 2025.
According to the Ministry of Municipal Affairs and Housing, there are 116 cities and municipalities that will have to submit a new assessment roll in 2023. Among them are Lévis, Rivière-du-Loup, Victoriaville, Sorel-Tracy, Saint-Jérôme, Mirabel, Terrebonne, Sainte-Thérèse, Bromont, Richelieu, Beloeil, Chambly, etc.
The new valuation of the properties is based on the value in July 2021.
To give you a “little idea” of the potential increase in the value of properties in the new assessment roll, here is, according to data collected by the Association professionnelle des courtiers immobiliers du Québec, the increase in the median price of single-family homes between July 2018 and July 2021.
- All of Quebec: from $246,000 to $369,000 (+50%)
- Montreal metropolitan area: from $336,250 to $500,500 (+48.8%)
- Quebec City metropolitan area: from $250,000 to $315,000 (+26%)
Regarding condominiums, the median price increase from July 2018 to July 2021 is as follows:
- All of Quebec: from $238,000 to $330,000 (+38.7%)
- Montreal metropolitan area: from $265,000 to $360,000 (+35.8%)
- Quebec City metropolitan area: from $180,000 to $212,250 (+17.9%)
The introduction of a new assessment roll also affects your 2023 school tax bill since it will be based on said roll.
It will also be necessary to monitor whether the drop in the school tax rate (per $100 of assessment) will largely offset the increase in the new property value.
A word of advice to all property owners affected by a new property assessment roll in 2023: I invite you to scrutinize your municipal and school tax accounts for 2023, while comparing them with those of 2022.