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By Altus Group | July 10, 2020

Those hit hardest by pandemic won’t see relief until 2023

The Manitoba property assessment cycle has recently been delayed for one year, with the next general reassessment being changed from 2022 to 2023. An amendment to Manitoba Regulation 78/2009 extends the present assessment cycle from two to three years and is a temporary measure, with a return to a two-year cycle as of 2023 fixed by Regulation. The Manitoba government’s decision to temporarily extend the cycle has significant potential consequences for taxpayers hardest hit by the COVID-19 pandemic.

As a result of the reassessment delay, the valuation date (called the “reference date”) for the 2022 property assessments remains April 1, 2018. Prior to the new Regulation, a reassessment of all properties in Manitoba with a valuation date of April 1, 2020 would have been required in 2022. Due to the delay, property assessments in Manitoba will not reflect any negative impact of the pandemic known by April 1, 2020 until the 2023 assessment.

 

Consequences of the Amendment for Taxpayers – Delays in Accounting for the Pandemic

The pandemic has profoundly affected many real estate sectors, particularly hospitality and retail. While some municipalities, including the City of Winnipeg, announced property tax deferrals in response to the substantial economic downturn, property tax abatements have not to date been offered and there is currently no indication these are expected to be announced in the future.

Since property tax abatements do not appear to be currently under consideration, the owners and tenants of properties in those industries hardest hit by the pandemic will continue to pay property taxes based on assessed values that do not reflect the economic reality those businesses were facing as of April 1, 2020.

Regulatory change means that taxpayers must now wait another full year before the effects of the pandemic can be accounted for in their assessed values. The valuation date will remain as April 1, 2018 for the 2022 assessments, which means that for 2022 properties will continue to be valued based on the economic conditions prior to the pandemic. Although the full impact of the pandemic on commercial properties was not fully known as of April 1, 2020, the economic conditions that were known by that date would arguably have reduced the values of many asset classes, possibly resulting in tax relief for 2022 through a reduced assessed value. With this regulated ‘freezing’ of the 2022 assessment, properties that have been severely impacted, such as hotels and retail properties, will still be assessed for 2022 at their full 2018 assessed value as if no such impact occurred.

 

Remedies to Consider

Since the economic impacts of the pandemic will not be reflected in the assessed values for an additional year, taxpayers should consider all options for achieving a fair property valuation and tax relief.

Altus Group is doing everything possible to protect our clients’ interests and address tax concerns during this difficult time. We are engaged with industry organizations such as Realpac, NAIOP and the ICSC and following advocacy efforts for measures such as tax deferral, abatement, or waiver. We are keeping apprised of any new tax deferral or abatement programs as they are introduced by municipalities.

For our clients impacted by Manitoba’s recent regulation we are currently investigating all options under current legislation to address changes in property values more expeditiously for those properties most impacted by the delay in the reassessment.  Among other factors, changes to the physical characteristics of the property, certain building closures and other damage to property may enable taxpayers to apply for property tax relief prior to the completion of the 2023 general assessment.

 

​Please contact Altus Group’s Property Tax Group to discuss your specific circumstances.

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