What is the difference between the
Valuation Date and
Physical Condition Date? BC Assessment uses these two dates when assessing properties. Property owners with new construction, renovations, damage or permitted use changes can better understand how BC Assessment handles these situations by understanding more about these two key dates and how they differ.
July 1st Valuation Date:
The
Assessment Act directs BC Assessment to estimate the market value of all properties in B.C. as of July 1st each year.
Market value is defined as "the most probable price, as of a specified date, in cash, or in terms equivalent to cash, or other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and for self-interest, assuming neither is under undue duress.” (Market Value - Appraisal Institute of Canada Third Canadian Edition)
When evaluating sales to determine the assessed value of a property, changing market conditions between the sale date and the July 1st valuation date are typically considered.
In a market with trending increases leading up to July 1st, a property would often sell for more on July 1st than if it sold earlier. In this example, for analysis purposes, the earlier sale price may be increased to make it more comparable to the market on July 1st. Similarly, if the market continued to increase after July 1st, sales occurring after could have their sale prices decreased to be more comparable to the conditions on the valuation date.
October 31st - Physical Condition and Permitted Use:
The
Assessment Act also directs BC Assessment to consider the Physical Condition and Permitted Use of property on October 31st. Properties with new construction, renovations, damage or permitted use changes are reviewed as of October 31st to determine their physical state. Below is an example of the interaction between the Valuation and Physical Condition dates for a residential property:
Example Situation – Physical Condition
A property that has a 1920’s home sold on June 15th. The home was demolished on August 10th and construction of a new home commenced. By October 31st, the house was 25 per cent complete.
Although the old house existed on July 1st (valuation date), it had been replaced by a partially complete new house by October 31st (physical condition date). In this situation, the new property assessment will reflect the value of the new partially complete home.
Example Situation – Permitted Use
On or before October 31st, the permitted use of a property changes. For example, the zoning changes from residential to commercial. In this scenario, the change will be considered to determine if there is an impact on the valuation and/or property classification for the upcoming property assessment.
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