Are you paying too much property tax?
Property taxes are a reality for any homeowner and a necessity to our city, but have you considered if you’re paying your fair share?
Last fall, MPAC sent out its property assessments for a four year period beginning January 1, 2012 which saw a 23% average increase in property values from its previous assessment date of January 1, 2008.
Although I speak with the odd homeowner who is outraged to see such large increases in their valuation knowing the increased assessment often leads to higher property taxes, most of us don’t give this assessment a second thought, and many of us are excited to see how much our properties have appreciated over recent years.
Having been through this once before with our previous home, I wasn’t surprised to see MPAC assessed our latest property purchase 20% higher than what we paid for it in the same year. I would like to believe that we paid drastically below market value for our property, but the reality is that MPAC assessed us incorrectly. In fact, I now understand how the city’s assessments influence some seller’s listing expectations, whether they are too high or too low. MPAC’s system for evaluating properties considers many of the same factors Real Estate Brokers would look at when doing a Comparative Market Analysis. However, MPAC’s approach tends to take a simplistic look at many factors and often relies on outdated and/or inaccurate information which can lead to drastically inaccurate valuations. For example, when determining my assessment my property was compared to a larger home 10 blocks away which was in immediate proximity to a desirable commercial strip. More comparable properties on my own street weren’t considered as strongly (never mind the actual purchase price of own property!). How does being over assessed impact me?
Your Municipality uses the MPAC assessment to determine how much your property has appreciated over the past four years and determines how much your property taxes will be impacted based on this appreciation/depreciation. Therefore, you could be paying more than your fair share of property tax if you have been over-assessed and it could be costing you hundreds of dollars a month.
When you go to sell your property (although it’s not bad to have a high assessment from MPAC), I find Buyers spend much more time scrutinizing the amount of property tax they pay to determine whether they can afford the carrying costs for the property. So paying more than your fair share of property tax does not help your cause when selling.
After submitting a Request for Reconsideration, the City of Toronto reduced my original assessment by 8%. However, feeling it was still too high, I decided to file for an appeal. Just days before the hearing was to take place, MPAC agreed to reduce the Assessed value to match our purchase price thereby lowering their original assessment by 20%. This adjustment is expected to reduce the amount of property tax we are suppose to pay over the next four years by approximately $2,500. So take a second look at your MPAC assessment before this year’s Request for Reconsideration Deadline passes on March 31. Feel free to contact me anytime to learn more about this process.
