Ontario realty tax assessments

The Ontario government has taken our residential tax assessments to a new level of confusion and many agents have been receiving calls from their clients about the new assessment notices sent out. So, here's a simplified version of what's happening.

First of all, please understand the most fundamental of principles of real estate taxation:

Assessed value x mill rate = tax amount due.

Every year the municipalities (Kitchener, Waterloo, Cambridge, townships) plus the Region, plus the school boards (public and separate) pass a budget and establish a mill rate based on the collective assessment for their area. In these confusing times people get upset with their increases in assessment. They shouldn't focus on the increase, they should focus on their increase compared to their neighbour, because that is what matters. This article I give you from the Ontario Real Estate Association, explains that the key is 5%. Compare yourself to that.

Tax assessments to rise in 2009
Ontario residential property taxpayers will see an average assessment increase of five per cent in 2009, the first year of a four-year phase-in plan.

“Residential property values have increased by an average of approximately 20 per cent across Ontario since 2005, when the last assessment update was done,” Carl Isenburg, President and Chief Administrative Officer of the Municipal Property Assessment Corporation (MPAC), said.

With a four-year phase-in, property taxpayers will see an average assessment increase of five per cent next year.

An increase in assessment does not necessarily mean an increase in property taxes. If the assessed value of a home has increased by the same percentage as the average in the municipality, there might be no increase in the property taxes paid by a property taxpayer.

The phase-in program does not apply to decreases in assessed value. The full amount of a decrease will be applied during the 2009 tax year.

“Our values are based on actual sales and trends in real estate markets across the province,” Isenburg said. Municipalities establish tax rates that are applied to assessed values to pay for local services and the Provincial Government sets rates for the education portion of the tax.

Property Assessment notices began arriving in the homes of property taxpayers in mid-September. MPAC expects the mailings to be completed over a ten-week period.

The confusing part (and this is my opinion) is that the Ontario government set an unattainable goal in making assessment equal to market value. It's like shooting at a moving target and is an unattainable goal.

Here's the most important point in this message: When looking at your assessment, look at your percentage change compared to all, not just your own. If your assessment changed more than the 5% per cent they are talking about, then you need to do some research. You should call your Prudential agent for some comparable salle research data. Don't feel you're imposing... that's what we're here for. From my past experience, the assessment appraisers are very open to changing assessments if you can give them data to back up your claim. But you can't go in shooting pistols without a basis for your argument. We are very happy to help our clients with that research data.

Hopefully all these asseessment issues will get simpler as time goes on.