Property Tax 101

Residential property taxes can be confusing. This video and guide help you understand what it all means.

 

 

The Smarter Growth Initiative created this video to help Calgarians understand the basics of property tax. After you watch it, check out the reference guide below for further learning. 

Calgary’s taxes among lowest in the country

In September of 2014, the Real Property Association of Canada (REALpac) published a report prepared by Altus Group. It compared the property tax rates of all of Canada’s major urban centres, showing that we paid an estimated 36% less than the Canadian average.


Source: 2014 Property Tax Rate Analysis, Altus Group

City’s share of your taxes
Only 62% of what you pay in property tax goes to The City’s budget – the remaining 38% goes to The Province of Alberta. More about that further along in this guide.

The typical Calgary household pays $140 per month in municipal property taxes. Here's how the majority of that money is spent:

Source: City of Calgary

We also benefit from a whole host of other services, like disaster response, affordable housing, youth programs, urban planning, festivals and climate change action.

Your property taxes don’t pay for infrastructure

There are two “sides” to The City’s budget: operating and capital. Our property taxes are revenue for the operating side, and are not used for things like land acquisitions, infrastructure and building construction. Learn more about the difference on the budget pages at calgary.ca.

Property taxes pay for 42% of Calgary’s operating budget

The City’s operating budget is $3.6 billion and our property taxes fund 42% of that, or $1,499.7 million. In 2014, we paid 41% of the operating budget, so that hasn’t changed much.

38% of your property taxes go to the Alberta Government

Of that 38%, most of The Province’s share of our property taxes goes towards providing stable support for educational priorities in the kindergarten to Grade 12 school system. You can learn more about Education Property Tax at their website.

Calgarians will pay a grand total of $716.8 million to The Province in 2015, which is 7.7% higher than the 2014 requisition. Visit the property tax pages at calgary.ca to read about how The Province’s tax needs affect some City Council decisions.

For more details about education and property taxes, check out this fact sheet provided by Municipal Affairs Alberta.

The City and Provincial needs are combined into one tax increase

Each year City Council approves a budget for city services. The Province then figures out what they need, and we receive a new tax rate based on the total (see more about the role of the mill rate below). This year, the combined tax increase is up 4.2% over 2014. 

What is tax room?

Tax room sometimes shows up because The City and The Province complete their budgetary processes at different times of the year. The City of Calgary estimates what the requisition will be from The Province, and builds it into their tax increases.

Once the provincial budget is set, though, there can be some “extra” property tax in the estimate that The Province doesn’t need. That's called tax room. In that case, The City decides whether to reallocate those extra tax dollars, or return them to tax payers. Here’s more from Mayor Nenshi in a Calgary Sun article from March 2011.

What’s a mill rate all about?

To determine the precise, proportional share of taxes paid by each resident, The City divides the property tax portion of the budget by the value of ALL properties in Calgary to get a "mill" rate.

The mill rate is, essentially, the amount of tax you’ll pay per dollar on the value of your home. It’s calculated by dividing the total revenue a city needs from property tax by the total value of all of the properties in Calgary. The process is repeated for The Province’s tax requirements. The two are added together to arrive at the current property tax mill rates. 

Source: City of Calgary

Finally, multiply the value of your property by the mill rate to get your total tax bill.  The 2015 mill rate for residential property is 0.0057544.

You can see more about that tax rate calculation on calgary.ca. 

The City never collects more than it needs

Just because your house is worth more on the market in any given year doesn’t mean your taxes will automatically rise to the same degree. That’s because The City doesn’t try to earn more revenue through property tax than it needs. That’s called a Revenue Neutral policy, and you can read more about it here on The City’s website.

Once the budget is approved showing the required revenue from property tax, each property pays the same percentage based on its assessed value. 

Go ahead and play with the City of Calgary calculator that shows what revenue neutral is all about.

Assessment Process

City of Calgary assessors evaluate a property’s value based on such criteria as its size, style, condition, location, number of bathrooms, recent renovations, property sales in its area and new construction permits nearby.

It’s the final estimated value that determines your taxes, not the neighbourhood you live in nor the square footage of your home.

Source: City of Calgary

The process is done by The City annually to be fair, as more frequent assessments minimize fluctuations in property taxes. Plus, this way, taxation responsibility is redistributed around Calgary, based on the change in property value compared to other parts of the city.

Here’s a great Q&A on Calgary.ca that should answer all of your questions about assessment.

Where you can join the conversation

The City hosts a yearly opportunity for Calgarians to provide feedback on the services funded by property taxes. In a Citizen Satisfaction survey, residents expressed their feelings about Calgary’s public services and general quality of life.

In 2014, 87% of Calgarians were satisfied with the quality of life. In particular, nearly two-thirds of citizens said The City put their property tax dollars to good use. 

The City of Calgary has a robust process of citizen engagement to help make decisions. Their website has all the upcoming opportunities, from all departments at City Hall.

Join the conversation!

Published
April 11th, 2016


Definitions of some of the most-used and important property tax terms.


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