Local Government Property Assessment & Classes
The assessment value of a property is the value of its land and improvements (building and fixtures) and is used to determine annual property taxes. The assessed value of a property is independently determined by BC Assessment.
In B.C., property assessment is administered by BC Assessment, a Crown corporation that operates under the Assessment Act. BC Assessment's primary objective is to produce annual independent and uniform property assessments for all property in the province and is responsible for determining the market value and classification of all properties.
Property Valuation Approaches
BC Assessment uses market value as the standard method of valuing properties. Determining market value varies depending on the type of the property and the availability of market data (i.e. sales or lease data):
- Sales comparison approach: Market value is based on the sale price of comparable properties. This valuation method works best for properties that are frequently bought and sold such as residential housing.
- Income approach: Market value is based on the capitalized value of current rents and leases. This valuation method works best for properties that sell less frequently but have an active rental or lease market such as commercial office space.
- Cost approach: Market value is based on the replacement cost of a property (taking into account depreciation of buildings and other improvements). This valuation method works best for properties that are neither sold nor rented frequently such as industrial properties.
- Prescribed approach: Market value is based on prescribed costs set by regulation or policy. This valuation method works best for properties that cannot easily be valued using any of the other approaches, such as ski hills and linear assets like rail tracks.
Land is valued based on its highest and best use, meaning the reasonable and optimal legal use of property which is both physically possible and financially feasible. For example, vacant downtown land may be valued at its development potential rather than existing use. BC Assessment will consider many factors when determining highest and best use, including zoning, official community plans and recent development trends.
BC Assessment categorizes every property in the province into one of the following nine classes set out in the Assessment Act based on the property's type or use:
- Class 1 (Residential): Land and improvements used for residential purposes, including single family dwellings, apartments, condominiums and manufactured homes.
- Class 2 (Utilities): Land and improvements used or held for rail transport, pipelines, telecommunications, closed circuit TV or electricity.
- Class 3 (Supportive Housing): Special needs housing for people at risk. Each property is assessed at a nominal amount of $2.
- Class 4 (Major Industry): Land and improvements used for mining, processing, manufacturing, extraction, smelting, refining and marine transport. Most properties in this class are involved in coal or mineral mining or manufacturing wood products, pulp and/or paper.
- Class 5 (Light Industry): Land and improvements used for extraction, processing, manufacturing and transportation as well as associated storage and warehousing that is not included in Classes 2 or 4.
- Class 6 (Business and Other): All land and improvements not included in any of the other classes. This class is primarily made up of commercial properties like offices and retail space.
- Class 7 (Managed Forest Land): Land that is being used for the production and harvesting of timber.
- Class 8 (Recreational Property/Non-Profit Organizations): Land used for recreational activities (for example, golf, skiing, tennis or swimming) and land and improvements used as places of public worship or for non-profit fraternal meetings.
- Class 9 (Farm): Land used for farming.