Protection for Property Owners

The Nova Scotia government is moving to protect property owners from the taxation impact of dramatically increased assessments.

Amendments to the Assessment Act introduced today, Oct. 30, would cap the amount of annual assessment increase that can be taxed by municipalities.

Like every province and state in North America, Nova Scotia uses the market value approach to setting property assessments. The local real estate market plays a substantial role in determining the market value of one's property. In certain parts of Nova Scotia, hot real estate markets have resulted in some property owners experiencing significant increases in their property assessment. This means corresponding increases in their property tax bills later in the year.

"The amendments propose to establish a base year for assessment purposes and, following consultation with the Union of Nova Scotia Municipalities (UNSM), establish a cap on future increases in taxable assessment," said Barry Barnet, Minister of Service Nova Scotia and Municipal Relations.

The 2001-02 municipal tax year is proposed to be used as the base year. Future increases for taxation purposes will be capped at a percentage to be determined following consultation with the UNSM.

For example, assume a property is assessed at $100,000 in 2001- 02. If the market value of that property increases to $150,000 the following year mainly because of the local market, and there were no improvements to the property, that property owner could expect to receive a tax bill from the municipality based on the assessed value times tax rate. If the rate hadn't changed from one year to the next, that property owner would be facing a 50 per cent increase in municipal property tax.

"Under our plan, in this example, the assessed value of the property would remain at $150,000, but the municipality would not tax the full 50 per cent increase in assessment," Mr. Barnet said. "There would be a cap, again to be determined later, that would determine the property owner's taxable assessment increase."

The minister said the bill would apply only to residential and resource property owners who are residents of Nova Scotia, and would allow property to be transferred within families without affecting the base year. If the property is sold outside the family, the year of the sale would become the new base year for assessment.

The minister said municipalities will not lose any revenue, but the amount of increased tax from certain individual properties would be impacted by a ceiling. "Such a limit on increased taxable assessment cannot in any way be characterized as losing revenue," the minister said.

The next step is to consult with the UNSM to determine the cap. However, the minister said the government is not looking at a long, drawn-out process. "We approach these discussions with an open mind, and we expect the UNSM will follow its stated declarations that it wants to resolve this issue," Mr. Barnet said. "We have been having on-and-off discussions with the UNSM for almost two years on this issue. There is no need for more studies, an independent analysis or further review. The time to act is now."