In late May, 2016, MPAC started sending out their 2016 Property Assessment Notices.
These lovely documents provide an assessed value for your property, based on a secret formula developed by MPAC scientists in a bunker in the wilds of Northern Ontario.
That might be a bit of an exaggeration.
Truth be told, to establish your property’s assessed value, MPAC analyzes sales of comparable properties in your area. They call this a Current Value Assessment (CVA) and they look at 200 different factors to determine what exactly a comparable property would be for your home. The exact formula, including factors considered, weighting and adjustments made is not shared with the general public or even nosy Realtors like myself.
They do tell us that five major factors account for approximately 85% of the value:
- lot dimensions
- living area
- age of the property, adjusted for any major renovations or additions
- quality of construction
Other features that may affect value include: number of bathrooms, fireplaces, garages, pools, whether properties have water frontage, and so on.
The last assessment notices were January 1, 2012 as it is only every four years that MPAC updates their assessment. The 2012 assessment values were below market value pretty much when they arrived and have only gotten less and less reflective of true market value as the market has grown since then.
I have seen a few 2016 assessments so far and they seem to be closer to true market value this time around. I am certain they have tweaked the formula in the last four years and it appears to have made it a bit more accurate.
The 2016 assessed value for your property will be used to calculate municipal property taxes for the 2017-2020 tax years. As before, any increases in assessment value are phased in gradually over four years. A decrease in assessed value is introduced to taxpayers immediately.
According to the MPAC Assessment Update, residential property owners will see an average assessment increase of approximately 7.5 per cent in 2017, 2018, 2019 and 2020. The average assessed value of a typical residential home in Toronto is $770,000 and the average assessed value of a condo is $363,000.
It’s interesting to note that reassessment at the municipal level does not generate any additional tax revenue for your municipality. This means that when property values increase, the municipality is required to adjust its municipal tax rates so the amount of property taxes collected remains the same. That’s the official party line but I’d be surprised if we didn’t see that being tweaked a bit in municipalities to up their revenue streams from property taxes.
Before you panic at the new assessed value and what the jump in value means to your taxes, an increase in assessment does not necessarily mean you will experience an increase in property taxes. If the assessed value of a home has increased by the same percentage as the average in the municipality, there may be limited increases in property taxes.
When you get your assessment, its definitely worth confirming the information used to determine it and compare your assessment with others in your neighbourhood by visiting MPAC’s online portal, http://www.aboutmyproperty.ca.
If you disagree with their assessment, you can file a Request for Reconsideration (RFR) and MPAC will review their assessment free of charge. You’ve got 120 days after the Issue Date to file a RFR so the clock is ticking. For more information, start by visiting their website page on this topic by clicking here.
Anecdotally, it can be difficult to get them to agree to your opinion and you should have something that is clearly wrong in the information they used for the assessment, or at least a factor that is open to interpretation as being wrong. Speaking from experience, calling them and telling them it should be lower because you want to pay less taxes doesn’t work that well.
If you want to discuss your MPAC assessment and get my take on whether it is accurate, don’t hesitate to get in touch. I’d love to be responsible for what comes next, particularly if it means we keep your property taxes from going up too much!
CEILING HEIGHT VARIETY
A building in which the ceiling heights are all the same is virtually incapable of making people comfortable.
I love this lesson as it is not something we typically think about or notice. Next time you are in a building or space that you find appealing, take a look at the ceilings.
Many homes only vary ceiling height when forced to by the structure, such as attics, or basements. Since I read this design lesson, I’ve started noticing that the spaces that I feel most comfortable in have ceiling height variety. High spaces for formal spaces, low ceilings for cozy nooks and so forth.