Assessment is the estimation of a property’s probable market value. Properties are assessed so that local governments can levy property taxes.
The market creates the value, the assessor reports it, and the municipal corporation sets the required tax rates based on a number of factors including assessed values.
What Laws Govern Property Assessment?
In Manitoba, property assessment is governed by the following legislation:
- Municipal Assessment Act (C.C.S.M. c. M226)
- Classification of Property and Portioned Values Regulation
- General Assessments and Related Matters Regulation
- Railway Roadway Property, Pipeline Property and Gas Distribution Systems (2016) Regulation
- City of Winnipeg Charter
- Municipal Act
Why Have a Property Tax?
Under provincial legislation, all properties in Manitoba are assessed every two years to ensure assessments keep pace with changing market values. This ensures an equitable distribution of property taxes.
Each owner’s share of property taxes is determined by their property’s assessment. Taxes paid do not necessarily reflect the amount of services a property owner uses — they are related to the value of the property.
The property tax is an important part of any well-balanced revenue system for a community. Property taxes fund such things as schools, fire and police protection, streets, libraries and other public benefits.
The property tax allows these services to be funded in proportion to the amount of money individual properties are worth. The property tax is also a more stable source of money compared to sales and income taxes because it does not fluctuate when communities have recessions or for other reasons an individual’s income might fluctuate.
In general, when a community spends more tax dollars on better schools, parks, streets and other public benefits and services, the property values rise and community members will ultimately benefit.
How is Real Property Classified?
Property is categorized to determine what percentage of the market value assessment the municipality will tax. The Municipal Assessment Act by way of the Classification of Property and Portioned Values Regulation sets out prescribed classes of property.
These classes of property are based on type, use, size and ownership of land or buildings, or any one or more of them. There are ten classifications in total, and in accordance with The Municipal Assessment Act, the assessor determines which classification applies to your property based on provincial legislation.
How are Property Taxes Calculated?
An assessment is the value of property used to calculate your property taxes. After estimating the market value of property, the value is multiplied by a factor (determined by property classification). The result is the portioned assessment.
Property taxes are calculated by applying municipal and school mill rates against the portioned assessment of your property. By definition, a mill is a one-thousandth part. For calculating taxes, one mill represents $1.00 of taxes for every $1,000.00 of portioned assessment.