Most people have a vague idea of what MPAC (Municipal Property Assessment Corporation) is and what the purpose of property assessment is.
As a property owner, your MPAC assessment is critical, so when you receive it in the mail, you should review it, and if you have any questions, contact MPAC or file it away.
When you finally buy your first home, you learn about things such as the MPAC assessment 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, and Assessed Value were.
How did MPAC Value our Home?
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 within the city and the education system.
MPAC Property Assessments
We used to be the people who had no idea about property taxes or MPAC, but we have since done our research, and here is what we learned.
Who is MPAC?
MPAC is responsible for assessing and classifying more than five million properties in Ontario in compliance with the Assessment Act and regulations set by the Government of Ontario.
Municipalities determine revenue requirements, set municipal tax rates and collect property taxes to pay for municipal services. Education tax rates, set by the Ontario Government, may also be applied using the assessed value.
It is the accuracy of our assessments that help to ensure property owners pay their fair share, and nothing more.
When we purchased our first home in 2009, we received a letter 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 assessed 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 values to calculate your and my property taxes, along with other factors.
Tell MPAC About Renovations
Should You Tell MPAC About Property Improvements and Renovations?
If you finished your basement or upgraded or made any significant 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 with tax stability 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 over the 4 year period.
Currently, we pay around
$3200, $4000 (2019) $5200 (2023) 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.
We changed how we pay for our property taxes and now authorized a direct debit from our account monthly.
This is because it eliminates one task from our monthly financial chores.
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
What Your Municipality Does With An MPAC Assessment
The primary purpose of an MPAC assessment is so that your municipality can correctly calculate your property taxes as a homeowner.
Under the phase-in provision in the Assessment Act, an increase in assessed value will be introduced gradually.
A decrease in assessed value is introduced immediately. The January 1, 2016 assessed value and classification of your property will be used as the basis for calculating your 2019-2020 property taxes, as illustrated below.
MPAC’s assessed value of your property as of January 1, 2016 $228,000
MPAC’s assessed value of your property as of January 1, 2012 $162,000
Between 2012 and 2016, your property’s assessed value changed by $66,000
|Tax Year||Assessed Value|
Where Does All Your Tax Dollars Go?
Well each city may be different in how they spend your tax dollars but for the most part, it goes to pay for municipal services such as;
- Public Transit
- Road Maintenance (ie: snow removal, repairs)
- Community Parks
- Community Pools
- Community Libraries and other 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 homeowners, government and business stakeholders, tenants, and municipalities in Ontario.
Related: 2018 MPAC Annual ReportAnnualReport2018 MPAC
They are responsible for assessing using 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.
2023 MPAC Assessment
Property assessments for the 2023 property tax year will continue to be based on January 1, 2016 current values.
This means your property assessment remains the same as it was for the 2022 tax year, unless there have been changes to your property, for example:
- A change to your property, including an addition, new construction, or renovation.
- A structure on your property was assessed for the first time.
- A change to your property’s classification.
- A Property no longer qualifies as farmland, conservation land or managed forests.
- All or part of your property no longer qualifies to be tax-exempt.
The next province-wide assessment will take place in 2016.
The next province-wide Assessment Update of all properties will take place in 2020.
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.MPAC Website
MPAC Notices Update 2019
Every four years, MPAC conducts a province-wide Assessment Update and mails a Property Assessment Notice to every property owner in Ontario.
The Notice you received in 2016 is MPAC’s assessed value of your property as of January 1, 2016. The information contained in the 2016 Notice will be used as the basis for calculating your property taxes for the 2017-2020 property tax years.
We continue to update property information during non-Assessment Update years. We are legislatively responsible for updating this information, even when a province-wide Assessment Update is not taking place.
Notices are mailed to property owners throughout the year to inform them of changes made to their property information.
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
What Is MPAC?
MPAC uses one of three recognized approaches to establish an assessed value for properties: the direct comparison approach, the income approach or the cost approach.
The approach is chosen based on the property’s current use and how frequently similar types of properties are bought and sold on the open market.
Direct Comparison Approach
Recent sales of comparable properties factor in this approach which means similar houses that have sold to that being valued by MPAC.
The ability of your property to earn revenue is factored into this approach.
So more for retail stores, buildings, malls, etc., as they rent out space.
This approach is for properties that are rare or don’t have a comparable, so they use the current costs involved to reproduce the property.
How much will it cost to build it again?
This represents such facilities as grain elevators, gravel pits, marinas, warehousing, etc.
As mentioned above MPAC will ask you for details about any major renovations and additions you have done over the 4 year period since the last MPAC assessment.
You should tell the truth, as it’s important to keep statistics uniform across the board so property taxes are fairly assessed.
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 the 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 disagree with your property assessment?
It 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 it 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?”
Fighting 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 send them a letter.
Before You Appeal
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 was unaware 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 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’s On-line Website or MPAC for more information.
Visit aboutmyproperty.ca to learn more about how your property was assessed
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 Homeowners.
Discussion: Have you ever had a problem with your MPAC Assessment?
Please leave your comments below, as I’d love to learn from your experiences.
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