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When is the next MPAC assessment?

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The Municipal Property Assessment Corporation (MPAC) plays a crucial role in determining property values and calculating property taxes in the province of Ontario. MPAC assessments are typically conducted every four years, but the COVID-19 pandemic caused a still-ongoing delay, leaving property owners and Ontario municipalities uncertain about the next reassessment date and its potential consequences.

In this article, we’ll look into the significance of MPAC’s role in determining property values and calculating property taxes in Ontario, as well as how Ontario businesses and homeowners are responding to the delayed reassessment process.

What is the Municipal Property Assessment Corporation (MPAC)?

The Municipal Property Assessment Corporation is a nonprofit organization that is funded collectively by all the municipalities in the province of Ontario. Its main responsibility is to oversee property assessments in the province. These Ontario property assessments determine the value of properties for property tax rates in accordance with the Assessment Act of Ontario.

MPAC is the largest assessment jurisdiction in North America, and categorizes more than 5 million properties that collectively represent a property value of $3 trillion. The provincial government relies on the assessed values that MPAC provides to set property taxes, which Ontario municipalities rely on to fund a variety of community services.

How do MPAC assessments impact my property value and taxes?

MPAC assessments establish your home’s current value by looking at things like the sales data from similar properties in a community, as well as other things like location, the size of your lot, your home’s age, and the quality of construction. The value of your home — which is different from the sale price — is then used by your municipality to calculate property taxes. If the value of your house increased by more than the city average from the last update, your property will likely experience a property tax increase. However, under the “phasing in eligible increases” provision in the Assessment Act, an increase in assessed value will be introduced gradually.

On its face, the property assessment system sounds fair because people with more valuable properties have higher assessments and therefore would pay more in property tax. However, in a recent investigation, the Toronto Star found that MPAC has been under- and over-assessing Toronto home values compared to their sale prices. The Star reports that MPAC “assessed the cheapest homes at values higher than their sales prices more often than the most expensive homes,” which has led to people in less fortunate neighbourhoods with cheaper homes paying more in property taxes than those living in richer neighbourhoods. The investigation led Toronto Mayor Olivia Chow to decry the discrepancies and demand that MPAC ensures its property assessment notice system is fair.

How property taxes are calculated in Ontario

Property taxes are calculated by taking your property’s value (as determined by MPAC) and then multiplying it by the combined tax rates (which include both municipal and education taxes) for your property class. Examples of property classes include single family homes, farms, and commercial properties.

Your property assessment and your property taxes are not the same thing. All tax payers pay property taxes based on what their home is worth and the residential tax rate set by their municipality. These funds are then used to support things like schools, police services, and public transit. So, for example, if the tax rate of your community is 1%, and your property’s assessed value is $500,000, your annual property tax would be $5,000 (1% of $500,000). That’s why if your property value increases, it’s likely you would pay more property tax.

If you’re a property owner, your municipality should send out a breakdown of your home’s assessed value and what your property taxes will be each year. You can also contact your local municipality or visit your city’s website to look up Ontario property assessment details that are informed by your home’s value, like your residential tax rate. Another option is to use your city’s online property tax calculator.

What's behind the MPAC assessment delays?

Normally, MPAC does assessments every four years to ensure that property values and property taxes are up to date. However, there hasn’t been an assessment since 2016. According to MPAC, the delayed assessment cycle is due to the pandemic.

“The scheduled property tax reassessment for 2021 was postponed to provide stability for taxpayers and to enable municipalities to focus on local efforts to respond to the COVID-19 pandemic,” says Scott Blodgett, senior media relations advisor for the Ontario Ministry of Finance, which helps oversee the Assessment Act.

“The government is currently considering different options regarding the timing of future reassessments. However, the government’s immediate priority is maintaining stability for taxpayers and municipalities at this time of economic uncertainty.”

Note that even without an official every-four-year-assessment, MPAC continues to review properties when they are newly built or renovated. So, you could still get an updated property assessment if you’ve done a major renovation or if something has impacted your home’s value or official classification.

When is the next MPAC assessment expected?

Even MPAC appears to be in the dark as to when the next assessment will be. The latest news is that it continues to be postponed until further notice.

Municipalities are likewise unsure of when the next assessment will be and are anxious to get news about a new reassessment date. Homeowners and homebuyers are wondering whether they should brace for significantly higher home values and, as a result, taxes. However, MPAC emphasizes that an adjustment to property value does not necessarily mean an equal adjustment to property tax bills. Normally, property owners will only pay more taxes if their assessed values have increased relative to others in the community.

Yet businesses and municipalities remain worried, with the Ontario government facing warnings from municipal, business, and real estate industry representatives about the negative economic impact that delayed property reassessments will have on the province. That includes uncertainty for investors and businesses looking to develop new properties or make investment decisions. It could also slow the housing market, as prospective buyers are uncertain about what their property taxes will be.

Many are urging Premier Doug Ford to commit to an MPAC reassessment date, especially as property values have significantly increased in most regions since the last assessment in 2016. Ford’s office, however, emphasizes that the priority is to maintain stability during economic uncertainty due to the lingering economic effects of COVID-19.

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