Most people have a vague idea what MPAC (Municipal Property Assessment Corporation) is and what the purpose of the property assessment is. When you finally make the decision to stop renting and buy your first home you learn about things such as what an MPAC assessment is and why you need to have one.
You get a letter in the mail that says your house is worth less than what you paid for it and you scratch your head wondering what the bloody hell they are going on about. If you are like us we didn’t know what the Market Value, Appraisal Value, Assessed Value was. How Did they Value our Home? Good Question!
We paid our mortgage in full after 5 years of owning our home in 2014 but that doesn’t mean we get to wash our hands of our MPAC assessment and property taxes. We are still responsible as homeowners to contribute to services with-in the city and the education system.
MPAC Property Assessments
That used to be us but we have since done our research and here is what we learned. When we purchased our first home in 2009 we received a letter in the mail with a notice of property value form we needed to fill out.
This form was to be sent back to MPAC and they would reply back with an assessment value of our home. We were then replied back to and there were minimal changes to our property value since Jan 1, 2008.
We received an assessment in 2009 even though it wasn’t the tax year simply because of the change of home ownership. (I think they secretly want to see if the previous owner told the truth as not everyone speaks up for fear their taxes will go up)
If you think when you purchase your home for let’s say for $320,000 that it is the value of your home and property that is far from the truth. The good part is the lower the assessment potentially the lower your property taxes although seeing the property value number can be disheartening for some.
I say potentially but in reality anything could happen. Plus, just because your property value went up it doesn’t necessarily mean your property taxes will go up. The municipal tax rate is applied to individual property value to calculate yours and my property taxes along with other factors.
Should You Tell MPAC About Property Improvements and Renovations?
If you finished your basement or upgraded or made any major renovations to your home in any way they will ask you for this information. The good thing is if your property taxes do go up they will be phased in over the span of four years with the introduction of the new phase-in program.This phase-in will help property owners for tax stability and so that they are predictable. If your property taxes have decreased that will be applied immediately.
This is my understanding from speaking with a representative of how our home’s property value will be phased in over the 4 year period. Currently we pay around $3200 a year for our property taxes. We pay our taxes in 4 installments throughout the year although you can have the bank pay the installment by taking extra money off you when you pay your mortgage payment. Some banks do this for no charge and others may charge you a hidden fee for this convenience so it’s worth it to ask your mortgage company or bank.
Example Property Tax Assessment on a home for the four-year phase in:
Property Value January 1,2008- $240,000
Property Value January 1, 2012- $280,000
Change in Value 2012- $40,000
- 2013-Value $250,000
- 2014-Value $260,000
- 2015-Value $270,000
- 2016-Value $280,000
Where Does All Your Tax Dollars Go?
Well each city may be different how they spend your tax dollars but for the most part it goes to pay for municipal services such as police, fire-fighters, public transit, road maintenance ( ie: snow removal, repairs), Community parks, pools, libraries and local centres. Lastly they will pay for the rubbish to be collected at your home.
Who Are The People At MPAC?
They are a not for profit public sector corporation whose role is to accurately value the properties of home-owners, government and business stakeholders, tenants, municipalities in Ontario.
They are responsible to assessing using a uniform evaluation legislation brought out by the Ontario Government called CVA (Current Value Assessment which is the most probable sale price for your property. They do this in compliance with the Assessment Act and other regulations.
When Will I Receive My MPAC Assessment?
In Ontario we go through a 4 year assessment cycle with the next MPAC Assessment being held in the Fall of 2012 effective for 2013-2016 based on a valuation date from January 1, 2012.
The next province-wide assessment will take place in 2016.
MPAC continues to review properties during non-Assessment Update years. New homes are built, owners renovate, additions are built, structures are removed or demolished and properties change use. Notices were mailed in October and November 2015 to reflect changes made in 2015.
How Will MPAC Assess My Property?
When MPAC also known as the Municipal Property Assessment Corporation looks at your property to assess the value they look at many major key factors as listed below which account for up to 85% although they have hundreds of factors they look at.
- Location (Remember…location, location, location…yep that could cost you)
- Lot Dimensions
- Living Area (you wanted the bigger home, you may pay for it)
- Quality Of Construction
- Age of Property and any major renovations or additions
Like I mentioned above they will ask you details on any major renovations and additions you have done over the 4 year period since the last assessment. You should tell the truth as it’s important to keep statistics uniform across the board.
In saying that MPAC will review your assessment if you do complete renovations, demolition, structural change, new build or if the property has new owners. This means you may receive a new tax assessment even if it’s not that time of year yet.
What Can Affect My Property Value?
Some examples of what could potentially affect your property value are below. To be honest I wasn’t shocked but I had no idea about the fireplace which could drive the price of your property value.
These are very important examples to know and understand especially when you plan to take on upgrading your home. Since we are doing extensive renovations mainly upgrades and finishing our basement this information will come in handy to us.
- Having a finished basement
- If your home has a pool
- Number of bathrooms in your home
- Type of Air Conditioning and Heating
- Fireplaces in the home
Why Your Assessed Value May Be Higher or Lower
Then you have some features that could drive the price up or down depending on whether your house
- Is your house a corner lot (nope, phew)
- What is the traffic like on the street (minimal, it’s not a main road for us)
- How close your house is to a golf course, green space, hydro corridor or railway. (not sure about why with the golf course though but that’s a big fat no for us)
MPAC Assessment Appeal
What if you don’t agree with your property assessment?
Sounds like an easy way out of paying your taxes but nothing in life is that simple. Yes you still need to pay for your tax bill if you file a property assessment appeal and will be adjusted when they are notified of changes. So although you may not agree with an MPAC assessment and try to fight it that doesn’t necessarily mean that it will help with lowering property taxes.
They say the number one question to ask when looking at the property assessment value they give you is.”Can I sell my home today for this price”? To fight property taxes may take a miracle but you can dispute property tax value if you feel it is incorrect.
If you want to appeal your property assessment you must send in a request for reconsideration to MPAC. You can obtain the forms from their website or simply send them a letter in the mail.
Before you appeal you should follow these steps detailed on the MPAC website
- Contact MPAC (1 866 296-MPAC (6722)
- Review similar properties to yours. I thought this was great and I was not aware we could do this. You can request up to 24 additional properties of your choice and up to 6 chosen by MPAC to review for free. That’s great if you really want to know if the value of your home is precise.
- If you still don’t agree you can ask MPAC to review your assessment free of charge but you only have until March 31 of the tax year to do so. You can also send a written request to MPAC at P.O box 9808 , Toronto, Ontario, M1S-5T9.
If you want more information on how your land assessment value will be processed you can visit your local City On-line Website or visit MPAC for more information. Remember when you get your mortgage approval from the bank and you set out to buy a home of all the little costs that could creep up.
Many people tend to overlook maintenance on a home and property taxes. When you buy a home you want to renovate or a larger home in a desirable area you could be paying more out-of-pocket.
Being informed about your MPAC Assessment and the value of your home is very important. Overall I think Mrs. CBB and I feel better informed about our MPAC Assessment and what it means to us as Ontario Home-owners.
Have you ever had a problem with your MPAC Assessment? What happened with your appeal? What did you learn?
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