Are you paying too much Charlottetown, Stratford, Summerside, or PEI Property Taxes?Find out how you can reduce your Prince Edward Island Real Estate property taxes now.
PEI Real Estate values go up, and down. Are your Prince Edward Island property taxes you are paying appropriate for your property?
Are you entitled to a 33% property tax deduction immediately?
Are you thinking about selling? Receive my 50 page report on the 10 Steps to successfully selling your Charlottetown & Prince Edward Island Home. See below.
There are two things that they say are guaranteed in life: death and taxes. Not anymore. Not to taxes anyway. I am talking about Prince Edward Island Real Estate taxes, and paying less of them.
Some of the property types affected:
- Single Family Homes
- Mobile and Mini-Homes
- Apartment buildings
- Commercial properties
- Raw land including acreage, building lots, and farm land
- Development properties
There is potential to reduce your property taxes in Charlottetown, Stratford, East & West Royalty, Sherwood, Summerside, Kensington, Winsloe, Alberton, Souris, O’Leary, Montague, Murray River, and the rest of Prince Edward Island from North Cape to East Point. Despite popular belief, property values do go down, and do not always go up. This was proven in the recent real estate crash. Which in fact, did affect PEI, specifically in certain property categories – more about this later.
Your property taxes are based on what is called an “assessment value”. This dollar value is on your tax bill, and it shows you what the PEI government thinks your property is worth. This value is what your property taxes are based on. In a nutshell: if your assessment value it too high, you are paying more then your fair share of property taxes.
An example of a PEI Property Tax Bill can be found here. In this real world example, the real estate property value is 18.6% higher than a CMA and an appraisal. This is pretty typical for the area. There would be no sense appealing this property tax bill.
Here is the kicker: Your property taxes are increased automatically by a computer, and are not necessarily in sync with actual market values. I have personally seen assessment values out by over 100%. That means you are paying twice as much property taxes then you should be. I have personally had the assessment value on a property I own reduced by over $129,000., and another reduced by almost half. Take a look at the proof:
Who wants to pay more property taxes then they have to?
In PEI, many of the assessment values are above “market value”. Market value is: what your property would sell for based on recent sales data (usually available only to real estate agents and appraisers for purposes of doing property evaluations). Appraisers perform appraisals, and real estate agents do CMA’s (comprehensive market analysis). Both processes are similar, and they should result in the same dollar figure. However, in some cases the data is very thin or non-existent, and therefore allows certain latitudes and flexibility for the person performing the evaluation. This pertains mostly to urban or country properties more so than city dwellings (Charlottetown, Summerside, East and West Royalty, and Stratford). The value an insurance company places on your property is almost completely irrelevant, and is determined for a different purpose and should be ignored. In my personal experience, and as a result of being a REALTOR in Prince Edward Island for almost 20 years, I find appraisals to be enthusiastic when it comes to evaluations. In other words, appraisals are usually higher than what a property will sell for on the open market. You could consider an appraisal value the “ideal sale price” in an ideal market and circumstance.
Does the PEI government have the manpower to make sure every property is assessed accurately?
In my opinion, No! Few government do. Overall, I think the Prince Edward Island government does a pretty good job with the resources that they have to get the job done. However, just like it is a good idea to balance our chequebooks, and have an accountant look at our income tax, it is also a great idea to take a look at our assessment values. This, in an effort to make sure we are not overpaying our PEI property taxes. One has to wonder; if all Prince Edward Island property taxes were at market value, would this increase or decrease their fiscal income? Many larger provinces and states commit massive manpower and resources to maintaining property tax values to reflect market values. PEI simply does not have the resources.
Do most homeowners think their property is worth more than it actually is?
Absolutely, without a doubt, I do not think you will find a single article that indicates the contrary. As a PEI Real Estate agent for almost 20 years, in my experience, I have found that less than 15% of homeowners know what their property is worth, and most overvalue it. Just take a look at the MLS at all the old stale over-priced listings. (I will refrain from going on a tangent here. If a home is priced right, it is not going to sit, providing people know it’s for sale and it is being marketed. See the Top 10 Reasons to list with Michael Poczynek here.)
But where do I get the data? How do I know what my PEI property is worth?
- Get an appraisal done. Michael Poczynek has a number of qualified home appraisers available to you at anytime. A home appraisal will cost you approximately $250. or more. Land, acreage, or commercial appraisals can cost you considerably more. Sometimes in excess of $1000. A house now typically costs $350. for an appraisal if it is in Charlottetown, Stratford, Summerside, or surrounding areas. Some appraisers do charge for travel time, and rightfully so.
- Get a CMA done. Many Real Estate Agents will perform this service for you. It is up to the individual agent or broker what he or she wishes to charge, if they charge anything at all.
What if I find my assessment value is more than my property value?
If your assessment value is higher than your property value, then you are paying too much property taxes. As a side note; if you can buy a property for less than assessment value, is it usually a really good deal. That’s why Michael offers a special “Asking Price vs. Assessment Value Report” to home buyers to find deals quickly. There is an example of this report here (Stratford/2015). Notice the top three properties are probably the best deals based on this formulation. This is a wonderfully quick and efficient way to take hundreds of active MLS listings and create a short list in a few minutes.
How do I get my PEI Property Taxes reduced?
Once you have established that your assessment value exceeds your property taxes, you may according to the Prince Edward Island Government website: If you disagree with your assessment, you can start a process called “referring the assessment for review”. The following outlines the three (3) steps in the referral and appeal process:
Step 1: Referral of Assessment
There is a form on page three of your Notice of Assessment and Summary of Property Charges that you can fill out. If you refer your assessment, you will need to provide reasons why your assessment should be considered. For example there has been a material change in your property that would affect the price. You have 90 days from the mailing date of your new assessment. The mailing date is printed on page one of your notice. Your referral is then assigned to a senior staff member for review. You will be contacted and the reason for the referral discussed. If necessary, a physical inspection of the property will be made. You will be notified of the department’s decision within 180 days of their receiving your referral. You are still advised to pay the property taxes owing by the due date to avoid interest charges. If the referral process results in a reduction to your assessment, the taxes will be adjusted accordingly.
(In layman’s terms; when you get your tax bill, there is a form you can fill out to appeal your assessment value. An example of the appeal form can be found here.)
Step 2: Appeal to Island Regulatory and Appeals Commission
If you are not satisfied with the decision, information on how to appeal is included with your notification. You have 21 days from the date you were notified to appeal the decision. Appeals are heard by the Island Regulatory and Appeals Commission (IRAC), an independent tribunal that hears appeals on issues relating to land use, property and revenue tax and unsightly premises. You will have to appear before the commission and explain why you disagree with the assessment. Assessment services staff will also appear to explain why they think the assessment is fair. You do not need a lawyer to appear before IRAC. Once an appeal hearing has been arranged and completed, the Commission will provide the appellant with a decision. The decision may be to either: dismiss the appeal; allow it and direct the Minister to vacate the assessment, or to make specific variations in the assessment; or refer the assessment back to the Minister for reassessment in accordance with the directions of the Commission.
Any decision of the Commission will come into effect from January 1 in the year for which the assessment appealed from was made, and any changes required to be made by the Minister as a consequence of the decision shall be made by the Minister within thirty (30) days after the Commission has made its decision.
Step 3: Appeal to the Supreme Court
If the property owner is not satisfied with the decision by the Commission, he or she can appeal the decision to the Supreme Court of Prince Edward Island.
What is the most important part about making an application to reduce your property taxes?
As per the above text from the government website: “…you will need to provide reasons why your assessment should be considered.” You are required to build a case for the reduction in property taxes. This is why you need an appraisal or a CMA accompanied by a properly structured letter explaining your case, evidence, and source(s).
How can Michael Poczynek help you reduce your Property Taxes?
A great deal of time can be spent determining the value of a property. As a service to my clients, anyone that lists their property with me (at market value) will receive at no cost:
- The data you require to appeal their property taxes if we determine that this would be a good strategy.
- An example or template of a properly written letter explaining the data and/or evidence.
- Justification for the data supplied by me.
- Walk you through the entire process.
- Follow up once you receive a response from the Government, and consideration and guidance towards your next step(s) providing there is one or more.
For non-clients or future clients:
E-Mail me the PID/Property ID number(s) of the property(ies) you wish for me to have a look at. I will at no charge take a quick look and inform you if it is wise to go any further.
Once we decide it is wise to go further, my fee is $250. plus HST. This fee will be completely refunded to you when and if you buy or sell a property through me within the next 5 years.
What can go wrong?
Your taxes can go up. I am not sure how often this happens, as I am not privy to the data. The government may be able to answer this. However, it is possible in theory. It is more likely if you have done major renovations without building permits in place. Building permits are normally a trigger to re-assess the property and increase property taxes.
How do I save 33% on my taxes immediately?
If you are an Prince Edward Island resident, as defined by the PEI Government, you will be entitled to a reduction in your PEI property taxes. This will be displayed on your tax bill as a credit. Here it is from the Real Property Tax Act:
5. Subject to the regulations, a person in whose name non-commercial
realty is assessed pursuant to the Real Property Assessment Act who is a
resident person or a resident corporation, except a person or corporation
holding in trust such realty owned by a non-resident person or nonresident
corporation, is eligible to receive a tax credit at the rate of $0.50
per $100.00 of assessment. 1993,c.18,s.1; 1995,c.36,s.1; 2008,c.2,s.1.
Here is an example from a residential property tax bill:
What is a Prince Edward Island “Resident”?
For the purposes of property taxes, as I understand it; in order to get the lower tax rate, one must reside in the province for 183 days consecutively. In my experience, there may be different definitions of a resident depending on the purpose and interaction with the Prince Edward Island Government.
What properties are the most over assessed in PEI?
- Newer homes less than 5 years old
- Waterfront lots
- Building lots
- Waterfront homes (Summer Homes, Oceanfront Homes)
- Also pay special attention to recently approved subdivision lots, and brand new houses
- Also any homes with frequently acquired building permits
Please note: This page is prepared for information purposes only, and should not be considered a substitute for the applicable statutes. Should there be any conflict between the contents of this page and the statutes, the statutes shall prevail.