How are properties Valuate in Melbourne?
To determine the taxable value of your property, MPAC analyzes sales of comparable properties in your area. This method, known as the current taxable value, is used by most jurisdictions in North America. We also look at all the important features that affect market value and we can take into account up to 200 factors when evaluating the value of a residential property.
Five main factors generally account for 85% of the value:
The dimensions of the lot
The living area
The age of the property, adjusted for any major renovations or additions
Quality of construction
Other characteristics that may affect the value include:
The presence of developed basements:
A swimming pool
The number of bathrooms
Type of heating and air conditioning
Site features may also increase or decrease the property Valuation of your property:
The fact that the property is located on a corner plot
The proximity of a golf course, a hydroelectric corridor, a railway or a green space
To determine the value of a property, MPAC collects information from a number of sources, including:
Site inspections and communications with landlords
Information on revenues and expenses (for residential, office and hotel buildings)
The real estate boards
What Happens Afterwards?
MPAC sends assessment information to the office of the City Clerk in the form of “assessment roles”. Municipalities then establish municipal tax rates based on their local budgets. They apply tax rates to the taxable values of properties to determine the amount of property taxes each owner must pay.
The relationship between property valuation and property tax.
Here is the formula for calculating municipal property taxes in Melbourne:
Valuation of Current Value (MPAC)
X Municipal + School + Regional / National Tax
Total Annual Property Tax
For example, if the taxable value of a property is $ 300,000 and the tax rate is 1.2%, the property tax will be calculated as follows: $ 300,000 X 0.012 00 = $ 3,600 per year The tax department of your local municipality can provide you with the exact tax rate that applies to your property, including its distribution between the municipal, school (provincial) and regional spheres or (Where applicable).
What is a Supplementary Property Valuation Notice?
A supplementary property valuation notice is issued by MPAC when an amendment is made to the property in the current taxation year. In your case, a new house was built.
Example of situation:
Your 2,000 square foot home is set on a lot with a 40 foot façade.
The property was transferred from the builder to the new owner, you in this case, and the property is in your name since August 1 of the current year.
The value of the lot is $ 100,000. That of the new residence is $ 200,000.
Following steps :
The builder is responsible for paying the property tax for the lot from January until July 31st.
At the time of closing, the builder’s lawyer and your lawyer reconcile the amount of tax paid by a notice of adjustment.
Therefore, you are responsible for paying the property tax of the lot.
Shortly after the transfer of ownership and the commencement of your occupation of the premises, MPAC establishes a taxable value for the new structure
A supplementary property valuation notice indicating this additional value is sent to you, as a new owner.
In this example, the effective date of the increase in value for the new home is August 1, based on the date of purchase.
MPAC shall notify the local municipality of all new valuation added to the property on its territory. The municipality then produces a supplementary tax statement and sends it to the owner by mail. The effective date of the tax statement is August 1.
The following is an example of actual property tax calculations that result from the additional valuation of a new home:
Taxable value of new home: $ 200,000
Hypothetical local tax rate: 0.01200 (1.2%) *
Total annual tax on new home: $ 2,400
Property tax prorated from August 1 to August
5/12 months = 0.4166
The supplementary tax statement for the new house alone is calculated as follows:
0.4166 X $ 2,400 = $ 999.84
* (Please note that the tax rate used in this example is for demonstration purposes only. Contact your local municipality’s tax department for the rate Tax that applies to your property.)
This additional tax statement applies to your new home. When a supplementary property valuation is added to the property, the municipality is entitled to collect the additional property tax from the date you purchased your home until the end of the current tax year . You can also receive a tax statement that represents the tax to be collected on the land.
The purpose of MPAC is to valuation all new residential buildings and additions within six months of occupancy. If your new home is not valued in the year you became a homeowner, you will still be responsible for paying tax from the date you purchased the property. An omitted property valuation notice will be issued the following year.