“Taxes are one of the biggest expenses associated with owning property,” said Raymond Williams, vice-chair for the Ontario chapter of the Canadian Property Tax Association. But he said: “It’s important to know that it can change, you can reduce them, and it’s just being aware of all the programs and options available.”
Watch for property assessment errors
Williams said every homeowner should periodically check their property taxes for any factual errors, such as the wrong lot size that their home was assessed on, or surprise tax increases. “If suddenly there’s a large jump in your taxes, chances are something changed on the assessment,” Williams said. “That’s when it’s probably worth investigating.”
Generally, the market value of a home and the tax rate set by the municipality determine the property tax, said Paul Sullivan, practice leader in advocacy and tax policy for Canada at Ryan Tax Firm in Vancouver. “What difference or distinction there is from province to province is the frequency of reassessment,” he said. “In British Columbia and Alberta, for example, we reassess every property at market value every year. In Ontario, by stark contrast, they have not reassessed properties since 2016,” he said.
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In Ontario, the not-for-profit Municipal Property Assessment Corp. typically assesses properties every four years to update the market value of homes; but reassessments have been on pause since the COVID-19 pandemic.
Home improvements can raise property taxes
However, Williams said any changes to a property that affects the market value of the home can then affect your tax bill. For instance, when a homeowner gets a building permit from the municipality to build a basement or add a pool in Ontario, MPAC would take note and update the property taxes based on the changes.
“They’re constantly reviewing that building permit data from municipalities to see where there are improvements and to ensure they have accurate assessments that reflect the current value of the property,” Williams said.
But homeowners can appeal their assessments annually if they feel they’re being charged unfairly. To do so, residents have to send an application outlining why they believe their property taxes are high and support the claim with data. Most homeowners rely on factual or equity data to get their taxes lowered, Williams said.
What makes a successful tax appeal
An appeal on factual data means fixing incorrect information, such as changing the size of the property from a misrepresented 2,000 square foot home to a more accurate 1,500 square feet. For example, you may have torn down your garage a couple of years ago, but the provincial agency isn’t aware of it, Williams said.
Another basis for an appeal could be equity data and market value, Sullivan said. That means asking whether the assessed market value of the property is reasonable. For equity, compare your property with similar properties in the area and see what they are paying in taxes. “Maybe the assessor is using new home sales to value my older home,” he said. “If you can prove that they’ve erroneously valued your property because the comparables selected weren’t appropriate, you could run a successful appeal.”
Sullivan said tax appeals can’t be based on an unwillingness to pay the bill. “Don’t waste the government’s time by just complaining about the level of taxes. Make sure you can prove your point,” he said.
Savings could also vary, depending on the degree of error or merit of the appeal. Refunds could be upward of 20% if the property was overvalued or as little as three to 5%, for example. “If it is just a minor error and you’re only taking $50,000 off of your assessment, the resulting tax savings or tax refund would be nominal here—maybe you’re saving a hundred dollars a year,” Williams said.
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