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Vancouver land values can be volatile, and as such, a practice called “Land Averaging” has been put in place to combat this unpredictability since 1993. This only applies to the following classes: residential (class 1), light industrial (class 5), and business properties (class 6). In essence, the total value for tax purposes is calculated as the 3 year averaged land value plus the current building value. In cases where the land value has increased dramatically but the building value decreased, it has resulted in lower taxes.

Every March, the use of the land averaging is decided for that year to smooth out any dramatic increases in land value. On March 25, 2015, a change in this practice for 2015 was announced. Instead of general “three-year averaging”, the City of Vancouver is moving to a policy of “”. In the new policy, only properties that increased above the average will benefit from land averaging. For commercial and industrial properties, the average was an 14.21675% increase. Simply put, for class 5 and 6 properties, the value would have to increase by 24.2175% in order to benefit from land averaging.

Property class 

Average increase

Benchmark 

Threshold for averaging 

Class 1 Residential 

8.76742%

10%

18.76742%

Class 5 Light Industrial

Class 6 Business & Other 

14.21675%

10%

24.21675%

*Note: The threshold is unforgiving as the City goes down to the 5th decimal point which can make a rounding difference, depending on the way assessments are calculated.

Who will this change affect?

  • Properties that have largely benefited from land averaging in the last 2 years will lose the lower land averaged land value and see an increase in taxes.
  • Properties that are under the threshold for averaging should expect to see a direct increase in property taxes this year, unbuffered by averaging.

There may be strange effects foreseeable from this change in policy. For one, properties that are close to the threshold for averaging will have a benefit to actually trying to increase their assessed value to the point where the property benefits from the targeted averaging practice and consequently a decrease in taxes.

If you require more information on the new “targeted land averaging” policy or other BC property tax or valuation questions, please contact directly via dnb [at] aecpropertytax.com (subject: Email%20thru%20AEC%20Website%20-%20Targeted%20Land%20Averaging) (email) or at 604.629.4643.

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