Ontario property taxes assessment for 2025 shall be based on 2016 property values as it is yet to be updated

As the new year approaches, one thing seems certain if you own real estate in Ontario: Your 2025 property taxes will still be based on 2016 property values.

 

Canada’s most populous province hasn’t updated property assessments in nearly nine years and still doesn’t have a date for when the long-awaited appraisals will take place. When the assessments finally happen, depending on where you live, it could mean a significant change in your tax bill.

 

Ontario legislation mandates that across-the-board assessments take place every four years, but Premier Doug Ford’s government suspended the cycle in 2021 because of the COVID-19 pandemic. The process then remained on hold after the province launched a review of the assessment system that has yet to conclude. The prolonged pause has left Ontario with the most out-of-date official measure of property values of any province.

 

The new assessment, when it happens, could result in a significant redistribution of the property tax load between residential and commercial properties in the same municipality or among neighbourhoods that have seen major disparities in real estate price changes, experts say.

 

If you’re trying to gauge what that means for your future property tax bill, it helps to understand how the system currently works and how real estate values have changed in your municipality and your neighbourhood since 2016.

In broad terms, municipalities are responsible for determining how much revenue they need to raise, an amount that’s been on the rise in cities across the province amid soaring population growth. They also set municipal tax rates, which, along with the education tax rate set by the province, determine property tax rates.

 

The Municipal Property Assessment Corporation (MPAC) runs the property assessments, which determine how the tax burden is shared. If your property appreciated more than the municipal average since the last assessment, your tax bill will likely increase; if the size of the change was below average, you’re probably in for a tax break; and if the difference in value roughly matches the average, your taxes will stay approximately the same.

 

Among the changes the current assessment doesn’t capture are: Toronto’s 2017 housing boom, the real estate gyrations of the pandemic, which sent home prices in much of the province skyward but hurt downtown office and retail properties amid the shift to remote work, and the current malaise in Toronto’s condo market, which has seen lower average selling prices compared with a year ago.

 

Without a date for the next assessment, it’s impossible to predict with any confidence how property tax bills will change, said Ryan Fagan, head of property tax for Canada at Altus Group, a real estate data and consultancy company.

 

But if the next mass appraisal was based on current property valuations, the distribution of the tax burden could see a major change. One big shift would see tax loads lightening on Toronto’s downtown office and retail space and likely increasing on the city’s residential properties, he added.

 

In places like Mississauga and Brampton, by contrast, the tax load would likely lighten on homeowners and increase on industrial properties, said Carl Gomez, chief economist and head of market analytics for Canada at CoStar Group, a commercial real estate information provider.

 

That’s because of the swaths of storing and distribution centres that have sprouted on the outskirts of the two cities and others in the province.

 

“With the e-commerce boom that was kicked off by the pandemic, the value of these warehouses kind of skyrocketed,” Mr. Gomez said.

Although residential real estate in those areas also saw exceptional price gains, it’s industrial properties that stand out for being under-taxed due to Ontario’s outdated assessments, he said.

 

A new assessment would also result in redistributions of the tax load among properties in the same categories – commercial, industrial, residential – based on how their relative value has changed.

 

If you’re curious – or worried – about what the math might look for you, you can look up your home’s estimated current market value using a reputable online calculator and contrast your property’s appreciation since 2016 with how the average home price in your municipality has evolved since then.

 

For example, it matters whether single detached homes saw bigger gains than condos and which neighbourhoods appreciated faster than others, Mr. Fagan said.

 

“Those are the types of things that you’ll look at to see who the winners and losers are,” Mr. Fagan said.

 

 

 

 

This article was first reported by The Globe and Mail