If there were to be a real property assessment freeze or cap in New Brunswick, what might the rules look like?

First, don't expect that it will apply to any type of commercial or industrial property.

And it surely wouldn't apply to non residents of New Brunswick.

Next, don't expect that it would apply to recreational, seasonal, and secondary properties like camps or cottages.

Of course the assessment for a newly constructed home could not be frozen until after it is assessed for the first time. An unwanted side effect of this could place new houses at an assessment / property tax disadvantage compared to existing houses.

Then don't expect that it will apply to any type of residential rental property. This leaves out landlords (both for profit and not for profit) and by extension their tenants. Approximately one third of New Brunswick households rent.

The remaining 66% of New Brunswick households might benefit from a freeze or cap. However who benefits most from an assessment freeze or cap? The New Brunswick household living in a modest bungalow assessed at $125,000 or the one living in executive two story assessed at $250,000? The real beneficiaries of an assessment freeze or cap will be the 33% of New Brunswick households that own their principal residence which is assessed above the median assessment value.

And what about renovations? Will the real property assessment still be frozen or capped if a major home renovation is carried out? Or will renovations trigger a re-assessment? Will this encourage the underground economy in home renovations?

And what about if the current owner sells? Will the "frozen" assessment be transferred to the new owner? Not likely. The real property assessment would then be brought up to date. Will the "frozen" assessment be transferred with the current household? What if the household is dissolved? Who would benefit from transferable frozen assessment?

Picture this. For whatever reason a homeowner wished to downsize. They want to sell the big home and get into a smaller, less expensive one. But guess what. Doing this may negate the "freeze" the homeowner has enjoyed. The property taxes on the smaller home could be more than the current taxes on the larger home.

First time homeowners and new house buyer would pay more property taxes than long time homeowners. Anyone who relocates, either within New Brunswick or into New Brunswick or would be subject to higher real property assessments and property taxes.

And what about the day when the freeze ends? Will real property assessments be returned to "real and true value"? Will everybody be happy with a sudden dose of reality?

And speaking of reality. Even if assessments are frozen, what if municipal spending still goes up? Let's say because of higher energy costs like fuel and electricity. The real property tax rate will have to go up to compensate. So what's the point of an assessment freeze if property taxes may have to go up anyway?

Does a real property assessment cap or freeze really make sense?

I posted this on April 1, but it's worth repeating!

Now that the New Brunswick numbers are released for residential sales in the first quarter of 2008, the City of Moncton shines as the star of the Province.  The number of residential properties reported sold through the four major real estate boards in New Brunswick declined 15% from the first quarter of 2007.

But not in the City of Moncton where sales advanced 3.8% in the first quarter.
Now that's quite a spread. So start spreading the news Moncton.
 
(I've had a peek at the numbers for April thus far and I'm confident Moncton will do it again in April.)

Larry Estabrooks
"Your Local Expert"

Why blame property assessments when the assessment is just one part of a simple mathematical equation which results in the residential property taxes homeowners pay directly and tenants pay indirectly?

If a municipality in New Brunswick wishes to freeze, limit or reduce the property taxes it collects then it merely has to freeze, limit or reduce its spending! It's that simple.

A municipal council estimates spending for the coming year and also decides how much of that spending will come from property tax revenues, both residential and commercial. The amount thus decided is divided by an amount representing the "real and true" value of all real property in the municipality (municipal assessment base). This calculation results in a municipal tax rate which when applied to a specific property's assessment results in the amount of municipal property taxes for that particular property.

If there is no growth in amount of spending from property tax revenues and the municipal assessment base grows, the mil rate would be less and an individual property tax bill might not grow even though the assessed value of the property may grow. If a property undergoes major renovations or substantial additions, one would expect its "real and true value" (and its property taxes) to increase.

In a prosperous and growing municipality the assessment base grows with new construction and development. In a prosperous and growing municipality the assessment base also grows with the effect of supply and demand on the sale of real property on the open market. In a stagnant or declining municipality, the opposite occurs.

Municipalities are compared and measured by the growth or decline of their municipal assessment base.
Property assessments should not be unfairly manipulated.

In my next blog post I'll point out the inequities that can result from "freezing" property assessments.

You're searching for something specific in a property.

But nothing that comes up on the search matches.

You need help, and I can search the database and get the results that match your specific criteria.

This time of year is a smart time to buy an already built new home in the Moncton area.

Here are just some of the reasons why I say this:

• At this time of year builders want to move what's left of their inventory and get to work on this year's crop of new homes.
• In the construction industry price increases in materials and labour usually occur at the beginning of the building season. New homes built and listed last year are often based on last year's pricing. Prices could be up this year making new homes built last year a better buy. Unless of course the builder has raised his pricing. If you have your own Buyer's agent (as opposed to the Agent for the builder), your agent should be able to research the pricing history to see if in fact the builder has raised the price to cover the builder's carrying costs.
• New homes that were not complete on January first are only partially assessed, meaning the buyer will  have lower property taxes for the rest of the year.
• The earth around foundations built and backfilled last year will have had an opportunity to settle. You will have all summer and fall to put your personal touch on the landscaping of you new home

As of this writing there are approximately 55 detached and 89 semi-detached new homes for sale in Moncton Riverview and Dieppe.

However before you call that builder's agent you should learn about the advantages of having your own agent.
Find out at MonctonGuide.com

• Agency Matters ..... Really
• Perspectives on Representation
• Real Estate Agency ... "eh?" to "zed"

I also address agency on my web page MonctonGuide.com

If you would like any help with the subject of agency,
please click "Add Comment" below or click here to send me a message.