Property Assessment

What is the fundamental issue?
Property taxes one of the most important factors in the decision to buy property. Property assessments, conducted by the Municipal Property Assessment Corporation (MPAC), are one of the elements that decide how much property tax an owner will pay in a given year.

Many property owners have complained that the property assessment process is flawed and, as a result, assessed values are incorrect.

I’m a REALTOR^®. What does this mean to me?
Property assessments have a direct impact on the amount of property tax owners pay in a given period. If the methodology for collecting and administering assessment information is unpredictable and lacks transparency, it can discourage firms and individuals from buying property.

Legislative/Regulatory Status/Outlook
In the 2008 provincial budget, the Government of Ontario announced that future property assessment increases for all properties would be phased in over a four year period.

According to MPAC’s 2008 assessment process, residential property values have increased by an average of approximately 20 per cent across Ontario since 2005, when the last assessment update was done. As a result of the four-year phase-in, property taxpayers will see an average assessment increase of 5 per cent for 2009.

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.

OREA Position
OREA believes the property assessment system should be fair, consistent across the province, and understandable to taxpayers.

OREA believes that municipal and provincial governments should be accountable for increases to their property tax base. Any property tax increase should come from decisions by government to raise tax rates, not through increasing property values.

OREA also believes that property taxes should be used primarily to pay for government services related to real estate.

OREA believes in reducing the heavy reliance on property taxes by local government. This reliance places an undue tax burden on residential and commercial real estate. More specifically, OREA does not believe that property owners should be forced to pay increased property taxes solely as a result of inflationary assessment increases.

OREA calls upon both the provincial and municipal levels of government to improve their own levels of transparency and accountability by legislating automatic decreases to education and municipal property tax rates that coincide with rising assessments to maintain a revenue neutral tax base.

Last updated: May 19, 2009