The City of Edmonton has 376,560 total properties it formally assesses, comprising 352,567 residential properties and 23,993 non-residential (including multi-family). Even though residential properties make up nearly 94% of the number of total properties, the taxable assessed value tells a different story. Of a total of $172.3 billion, residential amounts to $115.6B compared to $56.7B for non-residential, or 67% and 33% respectively.
The City sent out property assessment notices in early 2016 based on market conditions as of July 1st, 2015. After allowing a couple months for property owners to file formal complaints, the official tax bills will be sent this upcoming May. The deadline to file a complaint is March 11, 2016.
Once the complaint process has passed, the next step is to establish the tax rate, often referred to as the mill rate. According to the City, “2016 tax rates will be known by mid to late April 2016, when the 2016 property tax bylaw is approved and the provincial education tax amount is known.”
To calculate taxes, the assessed value is multiplied by the tax rate (in mills). As an example from the chart below for 2015 tax rates, a residential property with an assessed value of $500,000 paid taxes of $3,875.60 ($500,000 * 0.0077512). A commercial property of the same assessed value paid $9,426.25. Described another way, since the mill rate for non-residential properties is 2.43 times higher than residential properties, a non-residential property assessed at the same value as a residential property will pay 2.43 times as much tax.
Here were the tax rates for 2015:
Putting a larger burden on the non-residential tax base is a problem that has worsened over the past few years. As an example, in 2010 (Bylaw 15375), the mill rate for non-residential was 15.5588 and residential was 7.3487. This represents a 17.47% increase in the non-residential mill rate whereas residential saw a considerably lower 5.19% increase. It’s important to note this is just the percent increase in the mill rate itself and does not account for increased assessed values, the other component of the tax revenue formula.
For easy math, let’s assume non-residential and residential properties now assessed at $500,000 were assessed at $400,000 in 2010 (roughly 4.56% compounded annually) . The following represents taxes an owner of both properties would have paid in 2010 and 2015:
By combing inflation in both the assessed value and the mill rate the taxation issue becomes even more alarming. Taxes for the non-residential owner has increased 33.98% and the residential owner saw a 24.15% rise, corresponding to an 8.66% compounded rate for the former and 5.69% for the latter.
While all owners of properties – residential and non-residential alike – gripe about taxes, revenue from property tax only accounts for 52% of the City’s operating budget.
Our final stat highlights the non-residential tax rate of a couple other western Canadian cities:
Calgary (2015): 14.1942
Vancouver (2015): 15.04535
Don’t forget about March 11.
Chad GriffithsPartner, SIOR, CCIM
Chad is a partner with NAI Commercial Real Estate and focuses on the Greater Edmonton area. Chad entered the industry in 2004 and has completed over 400 commercial transactions with clients ranging from small, local companies to large institutional owners. Chad has been a top 15 producer with NAI Canada-wide since 2013.
Ryan BrownPartner, BCom, SIOR
Ryan is a partner with NAI Commercial Real Estate in Edmonton and is currently ranked nationally as one of NAI's top advisors. Having executed in excess of $100 Million worth of sales transactions and over 2 Million square feet of lease transactions, Ryan has developed a firm understanding of asset evaluation and an aptitude for building design, functionality, and long-term practicality.
Darcie is a licensed Commercial Real Estate Agent in the Province of Alberta with a focus on the Edmonton market and its surrounding areas. Darcie accomplishes custom solutions for her clients through her personable nature and results driven attitude. Darcie can help if you are looking to invest in commercial real estate or are looking for representation for a sale or lease transactions.
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