MPAC Assessment And The Value Of My House

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!

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 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.

How Will MPAC Assess My Property?

When MPAC 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.

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)
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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Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
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Comments

  1. thanks for sharing!!! I enjoy reading these kind of posts;)

  2. We have a similar system for our real estate taxes in Florida, except that your taxes are determined using a property appraisal from the county property appraiser. They are determined once per year, and might have very little to do with what your house is currently worth (as people found out when housing crashed).
    The valuations are determined using a market date of January 1 of the calendar year. So for the tax bill that we will receive in October/November, the property appraiser will have determined the property’s value as of January 1 2012. They also have the right to limit this value to exclude transactions they consider to be “distressed” or not “arms-length”, so excluded foreclosures and short sales for a while, despite those being the greatest volume of sales during the crash.
    We had to contest our property appraisal our first year, and with a careful understanding and using their valuation methods we were able to get a significant decrease in our appraised value for that calendar year, and an even bigger decrease the following year. It’s not easy, but here they are required to tell you exactly what they used to determine the appraisal, and you have to figure out why the comparable sales they chose are incorrect or an incomplete list.

    • Wow, sounds like that was one big headache for you. Amazing what the crash did for so many people. I can’t imagine how so many people are trying to get by. What did you contest when you requested what they used to determine the appraisal for your house?

  3. Christine Weadick says:

    We had MPAC sniffing around this year as we had a porch roof added to the house in 2009, we weren’t home when they showed up so I did talk to her on the phone and answered a few questions. She asked about the porch roof and I just told her we replaced one that had been there in past years before we had the house. You can still see where the old roof was by the paint marks on the brick. And actually we have had people stop to talk about how the house used to be. Have to see what the paper work says when we get the new accessment from them, last one said the house was worth up to $175,000.00. The assesser we had in last fall said $167,000.00. What ever, the taxes will still go up. I personally consider it almost useless as a house is only worth what some one is willing to pay for it, but they have to collect the money some how.

    • You are exactly right. A house is worth as much as someone is willing to pay. Since the prices of some of the house in the GTA and surrounding area .. or BC for that matter are outrageously overpriced people are still willing to pay for them. Everyone’s taxes go up… would take a miracle to see them go down lol..

      • Christine Weadick says:

        I hear you on the taxes!!! We had a mayor for a few terms that loved the nick-name Mr Zero as his line was that he never raised taxes… which was BS. He didn’t raise the mill rate but the assessed value of the house went up and so did the taxes. He put off so many things that should have been done because “he didn’t want to raise taxes” ….then when things got to the point things just had to be done, he decided to ‘retire’. The poor guy that replaced him had to raise the money to do all the things he had put off and the town tore him a new butthole for spending so much money…. but it had to be done and he took the fall. He lasted one term and then Mr Zero decided he had to come back and save us from the second guy…. it was so much crap. I can honestly say I never voted for Mr Zero as I knew he was full of it and I couldn’t stand him or his crap. Politics!!!!!!!! I’ve seen some of the prices in the GTA and it blows my poor little mind!!!! I have no idea how some people can afford it!!

        • It’s not easy and although we don’t live right in Toronto the prices just outside are still as nutty as it is right downtown. Wow that mayor sounds like he did a real job for the city. I don’t vote for anything as I’m not a Canadian Citizen but Mrs.CBB and I both talk about it. Mr.CBB

  4. I remember getting my assessment a few months after I moved in as I am the original owner of the house (it is 6 years old). I didn’t dispute it but I did request to change my taxes to the separate school board rather than the public board and the paper work they sent me was such a pain I decided to wait until I actually had a kid in school lol. My property taxes are constantly going up…popular place to live lol…at least the value of my house keeps going up too :-) MPAC is one of those things that a lot of people probably toss aside..thanks for bringing our attention to it :-)

    • Most people don’t have any idea about what MPAC really is. They fill it out (if that) and send it back not knowing how it may impact your taxes. I have yet to come across a place where taxes go down so needless to say every area is a popular area lol…What did they want from the paperwork as Mrs.CBB wanted to do the same as you. Cheers Mr.CBB

  5. mycanuckbuck says:

    I actually argued my value once – and they lowered it! Yay, lower taxes!

  6. We get an assessment once per year and it seem that you stay the same for years and then get a big increase. I don’t know the rhyme or reason behind it. No one comes to your property. I believe a large part of the sale of homes in your area. Our commercial property quadrupled a few years ago. When we called to ask why the huge increase, the said we have been undervalued for years and they were just catching up. I sometimes think Laurel and Hardy run the show with property valuation here. I can’t complain too much, though, our taxes are way lower than yours.

    • I think that is why they do the phase in here in Ontario so it’s not such a big hit all at once. I think it’s all a money grab crock of baloney but that’s just me and my thoughts on any taxes lol. They have to come up with something that sounds reasonable and that everyone will fall prey to so here it is. property assessments. Now that I researched and know more about it I will be much more inclined to be nosey about what’s going on in our area. Then I will make a final decision about this MPAC thing. Cheers Mr.CBB

  7. Thanks for the info. As a new homeowner (well sorta, my boyfriend owns but it’s for all intensive purposes both of ours) there is a lot I need to learn about owning a house. We live in a townhouse so I am not sure how that factors in really.

    • It really depends on where you live and what your City does to come up with Municipal taxes for homeowners. You should be able to go to your city website or simply ring them up to see what they say. If you own a home you will pay taxes, that is for definite. Cheers and thanks for dropping in. Mr.CBB

  8. Here in the States, I wish that our county assessor valued our house at less than what it is worth! The year we bought our house, it was “assessed” at $25,000 more than we bought it for…about 3 months later!!! We were not happy campers that we had to pay tax on a value assessment that seemed to come out of mid-air. When we questioned them about it, they said that they have a formula that they use. Of course, we told them that their formula was wrong since the market value of the house was what we paid for it. Long story short, we still lost:(

    Nice, informative article Mr. CBB!

  9. It seems like the assess value is always lower than the market value, at least where I live. I don’t out too much stock in it other than for tax purposes!

  10. It seems like the assessed value is always lower than market price, at least where I live. I just pay attention to it for tax purposes!

  11. John S @ Frugal Rules says:

    Thanks for sharing. We have a similar system in Nebraska. Of course, our state is completely backwards and the home valuations often become a political issue and there have also been allegations of shady deals going on.

  12. I had no idea! That’s good to know, especially as we start to looking to buy our second place.

  13. This process sounds similar to that in the US…although I’m not sure how often they come out and “view” the property. Our taxes go to our schools and the local law enforcement. I’ve never tried to do an appeal though although I’m sure it’s an option for those that want to consider it.

    • Oh I’m sure there is an option to appeal it as people make mistakes and someone has to assess whether an error was in fact made. Same here ours goes to the school board as well… and a host of many other things. Thanks for dropping in Jason! Mr.CBB

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  9. [...] market conditions. It is, in reality, an educated guess about what the market value may be. The assessed value of homes in Ontario is done by MPAC and is a (CVA) Current Value Assessment which is a common standard used for property assessment [...]

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