How property taxes ACTUALLY work

Update Property Taxes are designed to be confusing Dec 6 →

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1 How property taxes ACTUALLY work You're here
2 Property Taxes are designed to be confusing Dec 6, 2025

I'm about to clear up a major misconception about property tax, then jump into the comments where people who didn't watch the video repeat the same misinformation.

Welcome to Jackass.

Bad faith actors love to tell the lie that when citywide home prices rise, that gets added to your property tax bill.

Tim Cartmell Councillor, running for mayor

It's an easy way to rile people up and foment anger.

But that's not really how it works.

Lil' Edmonton

Let's look at a lil' version of Edmonton.

Every property has an assessed value. That total combined value is the assessment base.

City Council sets a budget in dollars. This is the amount of money that is required to deliver all the services the city offers. Our lil' Edmonton costs $9 to run each year.

So, we take our total budget, $9, and divide it among the assessment base of $60. That means that for every dollar of assessed value, a homeowner will pay 15 cents in taxes. That's the property tax rate, or what we call the mill rate.

With this mill rate, each property is paying three bucks in taxes. Easy.

The budget goes up

Okay. But let's say our lil' police gets a funding formula and the budget goes up. The city needs to collect 5% more, an extra 45 cents.

Since our assessment base hasn't changed, we divide our new budget by our assessment base. And now our mill rate has increased to 15 and 3/4 cents.

Each property will pay an extra 15 cents total, or 5% more. Each bill is $3.15 and bing, bang, boom, city funded.

Home prices go up

Okay, but what if it was a really good year? Our lil' city is calling! Demand shoots up and home prices jump 20%.

While each lil' house is worth more and our assessment base has increased, the city still has the same budgetary requirement. So the mill rate will drop.

That means when you multiply the new lower mill rate by the higher assessment value, the property tax bill is still the exact same, $3.15.

Property taxes don't work like income taxes, where the government is taking a percentage. So when you get a raise, so do they.

The city sets a dollar value budget and uses the assessed value of houses within the city to determine how big of a share each property pays that year.

Not every house grows the same

So, let's tweak the scenario. The city is still funding the police and still needs that 5% increase. But instead of house prices rising across the city, one house increases 20%, one increases by 8% and one increases by just 1%.

That brings our assessment base to $65.80 and our mill rate to around 14.4 cents.

And this is really interesting. While the city's tax requirement went up 5%, not every bill did. That's because the average property value increase in the city was around 9.6%.

So the houses who exceeded that benchmark, in other words, they gained wealth at a rate faster than their peers, they pay proportionally more.

The house that increased in value by 8%, which is less than the average, his taxes only increased by 3.3% this year, even though the city as a whole needed 5% more money.

And the final house ends up actually paying less tax this year, even though the city increased the budget by 5% and his home value increased.

That's because relative to his homeowner peers, he's falling behind. Their wealth is increasing faster than his, so his share of the property tax bill is lower.

Send this video to someone who doesn't understand property taxes and see if they can still find a way to blame it on Trudeau.

Part 2 · Dec 6, 2025 Property Taxes are designed to be confusing Property tax collection is designed to confuse you, and that's how the province prefers it. City Council has just approved a 6.9% increase to municipal taxes, but that will only increase your… Keep reading →