New Rates and Taxes Act passed

Dylan Burke - IPS

8 March 2008

Since the act was revised last year there has been a lot of misunderstanding with regards to the valuation portion. It requires land and buildings to be valued instead of just land valuation.

The core function of the act is that the municipality must now value its sectional title units individually; a new Property Rates Act is now set to come in which will determine the rates for 2007/2008. As a result, new valuations are needed to determine these rates, which come into affect in July this year.

On a stand-only valuation they were rated as a single general residential property. Unit owners paid a proportion of those rates as part of their body corporate levies. But the new act says municipalities must value and rate sectional title units individually.

The municipal value of your property is worked out by considering its market value including land and improvements, at the date of valuation. The act determines that properties have to be re-valued every four years and that the improved value of the property would be the basis of your rate calculations.

Valuations are done in person by officials from the municipality, along with other systems and techniques, including aerial photography and computer-assisted mass appraisal systems, for areas where there isn’t adequate market data.

You need to be well-informed about the provisions of the act, including the provisions on your rights and recourse regarding municipal rates. The main changes introduced by the new act are that a fixed residential property tax rate will in future be used and that the standard rebate previously used will fall away. Municipalities rates will only be finalized once the proposed budgets for the next financial year are completed (end 2006).

The act does make provision for a council to set out criteria for exemptions, reductions and rebates based on income levels and other criteria in its rates policy, and specifies that such policies must also be made available for public comment and input.

To ensure you do not pay more than you need to, there are a couple of things you need to know: one is that city and town councils must give property owners at least 30 days from the time that the completed valuation roll for a municipal area is published to review — and object to — the data on record for their respective properties at public venues.

An objector can also lodge an appeal with the appeals board if she or he is not satisfied with the decision of the municipal valuer.

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