Author: Financial Awakening Blog
If you still haven’t read Fighting with MPAC – Similar Properties Comparables, I highly recommend you to read it first.
Case Study
We’ve talked about the process when appealing with MPAC in ARB. In the coming series, I would like to talk about some cases that MPAC will use to fight you. The more you know about MPAC’s tricks, the more you will be prepared. You can find the case as an attachment.
Case DM68210 between Douglas and MPAC
This is a case that MPAC re appeal ARB’s decision. The point of argument in this case is regarding ASR (assessment to sale ratio). ASR is important because it is one of the main weapon MPAC uses to slaughter you. Basically, it is the ratio between actual sale price and assessment value. For example, if you purchase your house for $500k, and the assessed value is $600k then you have a ASR = 600k/500k = 1.2. The ASR is supposed to be between 0.95 and 1.05. Anything out of that range means MPAC’s estimate system is not working properly.
From Assessment Act
44(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,
(a) determine the current value of the land; and
(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land. 2008, c. 7, Sched. A, s. 13.
If ASR is 1.2, MPAC over estimate your property value and you should appeal. However, if ASR is lower than 0.95, MPAC cannot use similar property method to increase your assessment.
Although, I was using property owner’s house as an example, this is not the right way to apply ASR. If you read through the case, you will see that ASR would not be useful if you apply it on only one property. When I say not useful, I mean MPAC can re appeal and over turn the decision, as you can see in the case.
Summary about ASR:
- cannot be used only on one property
- reflect sales values for all homes in a particular vicinity
- when using ASR to compare, the properties need not be similar because ASR represent homes in the whole vicinity, not just one house
If one house has an ASR of 1.2, it only means this house is assessed too high.
However, on the other hand, the actual sale of a particular house is the best representation of current value of this particular house. If you have a sale close to the valuation year, such as 2008, 2012, you can argue with the current value instead of ASR. It is going to be much stronger.
Please take 5 minutes to read the case. It is not long, but can give you insight of the whole idea.
You can download the case here. -> MPAC case 1 DM68210
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