It was announced today that the two year Property Tax freeze will end for PEI landowners this year and starting in January property assessments will increase at the rate of inflation for current owners. The Property Assessment document will show to numbers. The true market assessment of the property, and the adjusted property assessment. The current owner will pay taxes based on the adjusted property assessment but if the property is sold, the new owner will start paying property taxes at the true market value. In other words the government gets a big tax increase thanks to new ownership.

Any thoughts on this plan?

You are confusing their definition of market value. Calling it a "true market value" is not accurate. Right now we are taxed on our frozen value and there is also a market assessment. When you sell your home the new owners assessment is increased to the market assessment.

This market assessment is shown on every single bill. The only difference in the future is that there will be a new field which will display the lower taxable number.

I am glad that is the case arod. I was quite upset about this new initiative as I am planning on selling my house very shortly and the way I understood it initially (as reggie the shark did) it would it would be more difficult. I already pay ridiculous property tax for the property I own IMO

I am confused on this as well. Realtors have a 'market value' that is usually quite a bit higher than the assessed value, based on what comparables have sold in a given location. The gap between assessed value and market value is highest in Charlottetown and surrounding areas versus rural areas, where the two are closer.

Sheridan is saying today "on average" assessed value is within 4 percent of market value. I don't know where he is getting this number.

For example, assessed versus 'market value' based on list price of active listings that Realtors the gap is much wider. Normally houses around here within a reasonable range of their asking price, esp. in this price range.

Here are some I looked at to compare without naming specific streets:

Brighton house is assessed at $84,000 asking price is $149,900

Sherwood house is assessed at $127,000 and listed at $159,500

Central Charlottetown house is assessed at $87,800 and listed at $174,500

Stratford house is assessed at $52,700 and listed at $164,900

These are going to be way more than 4%. Sheridan needs to clarify what he is talking about.

I have no idea where this 4% gap would be coming from either. I would guess on average it is more like 25%. If there were more assessors every area could be periodically reassessed and values could be kept more in line with actual market figures. Without that ability they have to rely on new permits and sales which must be inspected in order to ensure records are up to date and values are as close to accurate as possible.

My first question when I heard about this is who is giving the assessed value. The gov't number and what Realtors see is really different.

Our Manager at Century 21 just gave an interview to Compass which will be on tonight.

No one from the government consulted any real estate offices, or the PEI Real Estate Association with this. It likely could have been presented much better if they had. No one seems to know what is going on at this point.

I would say that information wasn't given out prior to the announcement to stop potentially incorrect information from leaking to the opposition...and what did they do? Make a statement to the media which includes vague information to be interpreted by the public in any number of ways.

I understand the reasoning behind not letting it out to selective parties...but the execution wasn't the best. I am sure everything will be clear soon enough.

Yes, Brendan Elliot from CBC has been doing a great job of tweeting from the legislature - it seems the main issue is the definition of 'market value' which hopefully Sheridan will clarify today.

I certainly hope so, they got me completely lost here...it also didn't help that they used one example from the union road i believe?

I think it is a good thing as maintains a modicum of tradition over the land market.

It encourages long term tax base/residency and keeps workforce stable.
It keeps real estate market stable & discourages speculators/realtors and profit driven over-development. Sure, realtors, appraisers and surveyors etc. will bellyache but less property flipping is desirable if we want to encourage the positive aspects of PEI life.

Some believe this policy has it’s roots in the Conservative Party, but whichever party, I thank the party in power for bringing it to the legislature floor– it seems somewhat Joe Ghizian in a strange way ….

After hearing Sheridan on the radio just now, it seems that the confusion is as we discussed - his definition of 'market value'. According to what he said, the government has their own system of determining 'market value' that is not the same as what Realtors and Appraisers use (we base market value on actual selling prices).

I'm not sure where his numbers come from but he is adamant that the gap will be no greater than 4% in most cases - which is much lower than where I initially thought he was going (if he used actual selling prices).

Still - it would be nice to have a clear outline of his definition of market value and how it is determined.

Liberals are saying that of course, realtors won't like this new tax structure because of what it will do to sales. Well, if it is not good for business, it is not good for PEI, Mr. Finance Minister. Sheridan says his market value is based on some "extremely accurate, scientific" formula, without bothering to offer much more in detail. Either he thinks it is over our heads, or he just can't be bothered with us and such details. One thing, realtors will have a tough time selling a property for a price higher then this new formula says the market value should be. In effect, this formula may end up dictating property and housing values, not the free market.

So...a tax formula clouded in mystery. Sheridan wants us to trust him. Yah, sure we will. They have earned our trust, right? Throw into such a confusing mix an overall rise in taxation for a property, stonewall questioning and ram it through 661 days before an election, with no public consultation...I think they feel they can get away with it politically.

Housing prices are rising across Canada. The long term ramifications will be higher taxes and fewer Islanders owning property. More Island property sold will be bought up by richer people from away.

Anybody remember about the "absentee landlords" we learned about in Island history back in junior high? I don't think Sheridan took that course in Shediac. Ghiz slept through it. Could we see sometime soon an Island Tea Party at the bottom of Great George in the Charlottetown Harbour?

After reading the comments on the Guardian site - I think everyone has to calm down on this issue. As for questioning Minister Sheridan's numbers I'm going to believe him before comments like realtor Steve Yorston on CBC (http://www.cbc.ca/canada/prince-edward- ... e-584.html) saying it could increase taxes by as much as $100 per month on a home? I'd like to see where he got that number. I checked my property tax bill from last year and the province's market value amount is 2.2% higher than the assessed value. If that's the case what's the big issue? If someone buys a house they pay a price for it (called the market value) and why shouldn't property taxes be based on this? (It's not under the proposed legislation - it's the provinces market value) People should take that into consideration when buying the home. As for realtors not liking it, it's not like they're just looking out for the consumer. If you're thinking about how much you're paying for the house and the potential property tax bill, you might think twice about buying that extra big house you don't really need they're trying to sell you to earn extra commission. Personally I don't see what the problem is here. We've had property taxes frozen since 2007. I don't like paying property taxes anymore than anyone else here, but our province is running an $85 million dollar deficit with a large portion of that from ever rising health care costs that we all enjoy for free. The taxes had to go up sometime.

There is not a SINGLE province in this country which has a system of assessment which is accurate to true housing values. It is the nature of mass appraisal. It has always been this way. I have not seen a meltdown of a property market in this country so far which could blame provincial property assessment...have you?

Free market will always rule when it comes to real valuation and thank goodness the people within the industry whether it be real estate agents, private appraisers or assessors realize this.

I would like to know how and why, areas mentioned with such high market values like brighton have such ridiculously low assessed values. And I am curious to know what the new assessed market values are going to be for such areas when they are finally determined.

This is the start of the taxes to cover the budget.I wonder if there might be another 7 per cent roll back comeing too.

In the past few years I would bet that values in Brighton have increased much quicker than in other areas. This will definitely widen a gap between the frozen assessed value and market values.

From my experience working in appraisal elsewhere and knowing a thing or two about how assessment works...I can tell you this.

Assessment for residential is done based on the cost approach and is rather accurate on newly constructed dwellings. As they age though, mass appraisal systems assume that the homes depreciate linearly. Over the life of the property, if nothing else changes the house will slowly deteriorate and the value of the dwelling itself will constantly fall. We know this is not necessarily the truth. As properties age people will renovate/update over time. Meanwhile, the mass appraisal system assumes can only assume that no changes have been made to the property and depreciation is applied, realistically condition is being maintained and value of the improvement is not plummeting. Over longer periods of time where ownership changes have not taken place...the gap between Market assessment and market value increase faster.

Unless assessors can get out and constantly reappraise the areas they look after...equality will never be reached unless a home changes hands. It would require a huge staff though.

Why wouldn't the government make this a whole lot clearer? That would have made things much better.

It is still confusing.

As pointed out to the Minister on the call in show this morning, the Provinicial Real Property Act defines Market Value as:

(f) “market value” means, in respect of real property, the most
probable sale price of that real property as of comparable properties
and the value indicated by rentals or anticipated net income;

Yet he's saying his version of Market Value is something else. Whatever it is, it needs to be specific and written as part of the new legislation or at any point down the road, things could be very different.

That is the correct literal definition of market value. Market value though is generally determined through the process of appraisal. Appraisal and assessment are two rather different practices and have different aproaches. Calling the number which is determined through the process of assessment a "market value" would be quite the stretch of the definition.

Market value cannot be determined via a mass appraisal.