Why We Are Doing This Work
As provincially mandated, the City of Saskatoon’s (City) Property Assessment Office reassesses all property types every four years so that your property’s market value reflects a more up-to-date, accurate and fair property value. Along with the City’s budgeting process and taxation policy, a property’s updated market value (i.e., reassessment) is then used to calculate the amount of property tax an owner is required to pay for the next four years.
In 2021, City Council received correspondence from representatives of the business community asking for the City to review its assessment and tax collection policies. Although The Cities Act does not allow for the City to change the current 4-year reassessment cycle, the City can determine its own tax policies for the variety of property classes in Saskatoon. This includes determining how changes in one’s property tax, as a result of a property’s reassessed value increasing/decreasing, are phased-in. Review assessment and tax policy responsibilities/decision makers here.
Following this request, City Administration provided a report to the Governance and Priorities Committee with information on the following:
- The assessment concerns/recommendations identified by the business community.
- The feasibility of establishing a permanent 4-year assessment phase-in policy.
- How the City can best share important information with property owners about the mass appraisal system and the upcoming changes to assessments.
Following the approval of this report, City Council called on City Administration to engage property owners on their preference for how their change in property tax (increase or decrease), as a result of reassessment, should be phased-in.
How Are Properties Assessed?
To determine a property’s market value, City assessors carefully evaluate the following information:
- Historical real estate sales that occurred within Saskatoon.
- The characteristics of a property, including the location, living area, lot size, age and any physical improvements that have been made.
With this information, City assessors estimate what a property is worth (i.e., a property’s market value) at the time of the base date. With the next legislated reassessment year set for 2025, sales prior to the base date of January 1st, 2023, will be used to determine your property’s updated market value.
Why Are Properties Reassessed?
Properties are assessed to determine the property’s market value and updated to capture changes in the real estate market. Provincial legislation in Saskatchewan requires a reassessment of all properties every four years so that property values reflect a more current value. This allows for properties to be more accurately and consistently assessed, and for property owners of similar properties to pay a fair and similar share of property tax.
The next legislated reassessment year for all property types is 2025.
How Do Reassessments Relate to Property Tax?
The amount of property tax a property owner is required to pay is determined by your property’s assessed market value, the City’s budgeting process and the City’s taxation policy. These three processes work together:
- Council determines the total amount of money the City needs via the budget process to provide the key civic services for Saskatoon residents at Council's set service levels.
- A property's assessed value determines its portion of the total required property tax.
- Tax Policy is the City’s tool to control how big each tax classes portion is and how much shifting occurs within each tax class.
After considering all three of these processes, your property's 2025 reassessed value will be used as the starting point to calculate your property tax for the next fours years, from 2025 to 2028. Note that your property’s 2025 assessed value will remain in place until the next legislated reassessment year, which will be 2029.
For more information about how each of the three processes contributes to determining the amount of property tax a property owner is required to pay, please refer to the table below:
| Process | Description |
|---|
| Budget | The City can only increase or decrease the total tax collected through the budget process. During the budgeting process the City of Saskatoon determines the proportion of property tax revenue that property classes will pay by calculating the mill rate. The mill rate is determined by identifying how much property tax revenue is needed for the City’s budget to provide the key civic services Saskatoon residents rely on every day. This amount is then divided by the total value of properties in Saskatoon (i.e., the taxable assessment) to determine the mill rate, which determines the distribution of property tax across Saskatoon. |
| Property Assessment | According to provincial legislation (The Cities Act), all property assessments must be conducted through mass appraisal. This ensures property owners with similar properties pay similar property tax. Mass appraisal is the process of preparing assessed values for a group of properties together to ensure similar types of properties (ex. single family properties) are grouped together and market factors are analyzed. |
| Taxation Policy | The City can determine its own tax policy. This allows City Council to make the decision on the available phase-in options to phase-in a tax increase and a tax decrease as a result of reassessment. This change can be made for a class or sub-class of taxable properties with the caveat that the phase-in occurs within the assessment cycle (i.e., 4-years in Saskatchewan) and it remains revenue neutral. |
Revenue Neutral and Phase-In: What Do These Terms Mean?
Revenue Neutral
Reassessment and the use of phase-in must result in what the City calls revenue neutral. This means the impact of reassessment does not increase or decrease the funding the City receives from property tax.
Changes in assessment are offset by changes in the tax rates. For example, if the total assessment increased for the Residential property class, then the Residential property tax rate must be lowered to ensure the same amount of property tax is collected. This process ensures that the same amount of tax dollars is collected by the City to help provide the civic services Saskatoon residents rely on every day.
Phase-In
Phase-in policies are revenue neutral and the City evaluates the need for phase-in at every reassessment cycle. Using phase-in can help to distribute property owners’ tax load by smoothing out large shifts in property values which occurred due to reassessment. Changes to property tax, as a result of their reassessed values, can be phased-in over the 4-years before the next reassessment date (i.e., 2-year, or 4-year phase-in options). Note that physical changes to a property that occur after reassessment or property tax increases cannot be phased in.
Therefore, if a phase-in is used:
- You will not see the end results of reassessment until your property tax phase-in (2-year or 4-year) is completed.
- a property with an increase in property tax would have the increased tax phased in over time.
- a property with a decrease in in property tax would pay more in the meantime to fund the phase-in impact for properties that saw increases to their property tax.
- the City will still collect the same amount of property tax revenue that was determined to be needed at budget time.
To learn more, please see our resources on How Phase-in Options Work Visually and/or By the Numbers, as well as How the City Has Used Phase-in Options over the last three legislated assessment cycles.
How Does the Phase-In Period Affect Me?
Since the phase-in of property tax would occur for all property owners across Saskatoon, so too would the impacts. Therefore, when considering the options ask yourself if your property tax goes down as a result of your property’s new 2025 reassessment value, would you be willing to delay your decrease in the amount of tax owed to help another property owner delay their increase?
We understand there is a lot to consider in this process, so we have summarized some of the Pros and Cons of using phase-in options within the table below. To learn more about the phase-in options, please see our resources on How Phase-in Options Work Visually and/or By the Numbers, as well as How the City Has Used Phase-in Options over the last three legislated assessment cycles.
| PROS | CONS |
|---|
| PRO for Property Owners: the process of phase-in can help relieve the financial burden of a large property tax shift for some property owners/classes that can occur within the 4-year reassessment cycle. | CON for Property Owners: Property owners who should be getting a decrease in their property tax as a result of reassessment would pay more upfront with phase-in and thereby, subsidizing property owners getting an increase. |
| PRO for Property Owners: property owners have additional time to address increases to their property tax as a result of their reassessment determining a higher assessed market value. | CON for Property Owners: phase-in is can be confusing. Here’s why: if a property were to have a decrease in their property tax due to reassessment, the phase-in calculation would be displayed as a positive adjustment/charge. Due to this, the property owner’s tax bill would show an increase beyond what the budget and their assessed value dictates. |
| PRO for City Council: the overall process of phase-in provides City Council with a tax tool to smooth out shifts in the value of properties caused by reassessment, without impacting the City’s overall budget. | CON for Property Owners: Phase-in adds another layer to the calculation of your property tax. |
| | Overall CON: phase-in is a complex and time-consuming process that can present difficulties in administering and explaining to property owners. |
