- 04 Oct
If you live in Toronto you know how crazy the real estate market is. Property prices seem to triple ever week. What does this mean for your property tax?
At the end of next year, MPAC, the provincial body tasked with setting your property assessment, will send all property owners across Ontario a 2016 Base Year valuation. This valuation will be used to calculate your property tax for 2017 – 2020. Basically, it is how much the government thinks your property is worth, and they tax you on this value.
If your property is located in the GTA there is a good chance your assessment will increase substantially. The last time MPAC assessed all the properties in Ontario was in 2008, in a very different economic environment. The market has dramatically changed since then.
What if my property assessment does increase? What happens?
If your property assessment increases you will likely have to pay more taxes. Plain and simple (Unless you are an exempted property, such as a church or school, or you are still taxed under the old Cap and Claw-back system).
To lessen the impact on the tax payer, province allows “phase-ins”. This means that the new assessment only comes into full effect in the last tax year of the cycle - tax year 2020. So, if your property was worth $1 million in 2008, and your new 2016 assessment is $2 million, each year your assessment will increase by $250,000, i.e. 2017 = $1.25 million, 2018 = $1.5 million, etc.
What if MPAC gets my assessment wrong?
Your property should be assessed at what it would fetch in an arms-length transaction on the open market. If you think that MPAC has incorrectly valued your property you can either ask them to reconsider their assessment or you can appeal to the Assessment Review Board. Keep in mind that there are different procedures for different property types and hard deadlines. If you do decide you want to challenge your assessment, you should act quickly and seek professional advice.