Tag Archives: land transfer tax

Everything you need to know about your MPAC assessment and property taxes

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When people are trying to figure out whether they can afford a home, they’ll typically focus on the numbers of their down payment and mortgage. While this instinct is understandable — these factors, after all, account for the bulk of home ownership costs — paying down the actual price of your home isn’t all there is to it. Depending on what you own, homeownership costs can also span utilities, condo fees, maintenance fees, and insurance.

No matter what kind of property you have, though, you’ll have to pay property taxes.

What are property taxes, and how do they work? A property tax is a fee that property owners are charged by their local government, based on the value of their property. The tax is usually a percentage of the property’s value, and the exact percentage that a government will charge will vary depending on the municipality you live in. But how does the government determine how much your property is worth?

The answer, if you live in Ontario, is MPAC. The not-for-profit organization works with the province to assess every property in Ontario, and report their dollar value to the municipalities they belong to. Each local government will then use those numbers to set the price of your property tax.

MPAC updates its property assessments across the province once every four years, and the next update is scheduled for 2020. To help you understand how the process works and how it impacts you, we asked Greg Baxter, director of valuation and customer relations at MPAC, to break it down.

What is an MPAC assessment?

Simply put, an assessment is the process that MPAC uses to figure out how much money your property is worth. Your local government will then determine how much you owe in property taxes, based on this value.

“We are responsible for assessing and classifying all properties in Ontario,” Baxter explains. “There are more than five million properties in Ontario — and that represents about $2.78 trillion in property value.”

In Ontario, MPAC will update the value of properties across the province every four years — the last few updates were made in 2012, 2016, and the next one is scheduled for 2020.

The property values that MPAC reports during each update help determine how much property tax you’ll pay over the next four years. For example, if MPAC decided that the value of your home was $500,000 in 2012, the government calculated your property taxes based on a $500,000 value between 2013 and 2016, when MPAC made its next assessment update. The 2016 assessment was then applied between 2017 and 2020.

There are exceptions, though. MPAC continues to review properties between officially-scheduled updates to account for big changes like new structures being built, buildings being demolished, and properties changing uses. When this kind of change happens, MPAC will give you a new assessment for your next tax year.

And what happens if the value of your home changes between one scheduled assessment period and the next? Do you immediately get hit with a higher — or lower — assessment?

To protect homeowners from sudden increases in their property taxes, the Ontario government uses what it calls a “phase-in program.” Let’s say that the value of your home increased dramatically between 2012 and 2016, because you live in an expensive city (ahem, Toronto). Instead of immediately asking you to pay property taxes based on this new value, the value is gradually phased in between 2017 and 2020 until it reaches the full assessed value, so you have time to adjust.

On the other hand, if MPAC discovers that the value of your home decreased, no “phasing” is necessary: the assessed value of your home will immediately drop — along with (probably) the amount of property tax you’re paying.

It’s important to understand that changes in your property’s assessed value will not always lead to changes in how much you pay in property taxes. “If the assessed value of a home has increased by the same percentage as the average in the municipality, there may not be an increase in the property taxes paid by a property owner,” Baxter explains. “Contact your local municipality or taxing authority if you have questions about your property tax.”

How does MPAC determine the value of my property?

Essentially, it all boils down to sales data from Teranet, which runs Ontario’s land registration system.

“We look at sales — property sales transactions that occur between a willing buyer and a willing seller,” says Baxter. “By analyzing the sales and by analyzing the data that we have on those properties, we’re able to arrive at the current value assessment.”

The value that MPAC gives to your property every four years is what MPAC believes your property would have sold for on a given “valuation date.” The most recent valuation dates have been Jan. 1, 2012, Jan. 1, 2016, and Jan. 1, 2019. That means if MPAC assessed the value of your property to be $1 million on Jan. 1, 2012, the next four tax years — 2013 through 2016 — saw your property taxes calculated based on a $1 million home value.

While valuation dates have typically happened in the same year as assessment updates (see 2012 and 2016), recent legislative changes made it necessary for MPAC to set its latest valuation date a full year ahead of the upcoming assessment update in 2020 — the valuation date for the 2021 through 2024 tax period was on Jan. 1, 2019.

But how does the housing market itself come up with prices? “For residential purposes, there’s about five main factors that account for roughly 85% of the value of a property,” Baxter explains. These include:

  • The age of the property
  • The size of the home structure
  • The location of the property
  • The size of the lot
  • The quality of construction

Earlier, we mentioned that MPAC continues to review major property changes — like new structures being built or demolished — in between official assessment updates. When MPAC calculates a new value for your property after a big change, that new value will still be based on the last set valuation period.

If you’re confused, consider this example: let’s say your property was assessed at $500,000 on Jan. 1, 2012, so your property taxes would be calculated based on a $500,000 property value between 2013 and 2016. In 2014, however, right in the middle of that tax period, you demolished your home but still owned the property — which is now an empty lot. MPAC will reassess the value of your home for the 2015 tax year based on this change, by estimating what the current state of your property — an empty lot — would have sold for on Jan. 1, 2012.

How can you prepare for your assessment?

“Really, property owners are not required to do anything to prepare for an assessment,” says Baxter. “We complete a province wide assessment update every four years, based on the legislative valuation date. And then we mail to property owners a property assessment notice.”

Again, the next assessment update is schedule for 2020, and will apply to the tax years between 2021 and 2024.

To review the information that MPAC has on your home, Baxter advises homeowners to visit aboutmyproperty.ca. If any of the information is incorrect, you should contact MPAC to have it updated.

Baxter encourages all property owners to visit the site, which also allows them to compare their property to properties within their area. In general, it also helps homeowners “gain clarity on the information that we have on their file related to their property.”

Will a new MPAC assessment affect my home insurance rate?

Given that your home insurance rate is partly determined by how much it would cost to fix your home in the case of an emergency, the question is worth asking.

Turns out, it doesn’t affect your rate at all.

“The assessed property value for taxation is not material for property insurance,” confirmed Vanessa Barrasa at the Insurance Bureau of Canada.

Source: Lowestrate.ca – By: Jessica Mach on January 15, 2019

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Tax credits and rebates for homeowners

Owning a home costs money, but there are tax credits and rebates specifically for Canadian homeowners. Here are a few to get you started.

New home perk

If you just bought a house and you haven’t owned a home in the four previous years, you can get the Home Buyers’ Tax Credit. Enter the amount of $5,000 on line 369 of your tax form and you’ll get a 15% credit.

Reduces tax load by $750

Assess the abode

Before starting a major renovation, get an ecoENERGY assessment from a certified energy advisor. You’ll pay about $1,000 for before-and-after audits, but provincial rebates can reimburse these costs.

Rebates up to $500

Cash in on rebates

Rebates depend on where you live but can include:

Improve insulation— Up to $3,250
Ductless heat pump— $800
Install ventilation fan— Up to $50
Draft-proof your home— Up to $500
Install a gas fireplace— $300
Replace windows & doors— Up to $500
Replace appliances— (each) $50+
Do more than three upgrades— $750

Save up to $7,000

Build safer—and save

Renos that make a home safer or more accessible for seniors and the disabled—including installation of grab bars and hand rails, the construction of walk-in or wheel-in showers,widening doorways and lowering cabinets­—qualify for a new tax credit that offers a rebate of 15%.

Save up to $10,000 (max.)

More income, less tax

Rent out your basement or turn a hobby into a home-based business. Both allow you to deduct expenses, including mortgage, utilities,property tax and insurance. Claim the deductions against income generated on your tax return.

Source: MoneySense – by
March 2nd, 2017

Sources: Natural Resources Canada, Canada Revenue Agency, BC Hydro, Union Gas, Enbridge Gas, FortisBC, Prince Edward Island Government

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BREAKING NEWS: Ontario helping first-time homebuyers

Ontario is doubling the rebate on the land-transfer tax for first-time homebuyers to $4,000, but is increasing the same tax on homes that sell for over $2 million.

The government says half of first-time buyers won’t pay any land-transfer tax to the province, while the half-percentage point increase on homes over $2 million will affect less than one per cent of the population.

The province takes in over $2.1 billion a year in the land-transfer tax, and the government says any increase in revenues from the increase on luxury homes will help pay for the doubled rebates for first-time buyers.

Premier Kathleen Wynne had said the government was worried about the difficulty faced by first-time buyers trying to get into the housing market, especially in the Greater Toronto Area where the average price is $762,975.

The government also announced it is freezing the property tax on apartment buildings while it reviews how it affects rental market affordability.

The changes to the land-transfer tax are outlined in the Ontario government’s fall economic statement, which says that home ownership has become a key factor in many people’s long term financial security.

The Ontario Real Estate Association had asked the government to expand the land-transfer tax rebate program for first-time buyers as one way to help more of them get into the housing market.

The city of Toronto has its own land transfer tax, which offers rebates of up to $3,725 for first time buyers.

Ontario’s land-transfer tax rises from half-a-per cent on the first $55,000 of a purchase price to two per cent for everything above $400,000. Toronto’s land-transfer tax is one per cent on the first $55,000 and two per cent on the rest.

Source: The Canadian Press | 14 Nov 2016
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Four things people always forget to check when buying a new home

Buying a home is no easy task.

With so many open houses and so many choices, by the time you find a property that just has that right feeling, you’re usually tempted to grab for the pen and sign your life away. Take a minute though; because people often get so lost in the appeal of the home and property itself, they forget to consider the surrounding neighbourhood. And believe us, your new home can really lose its luster if its located say, a 30-minute drive away from the nearest grocery store or school. That’s why Canada AM hosts sat down with Real Estate Expert Sandra Rinomato, so that you can get the home you want, in the neighbourhood you want it in.

CONSIDER YOUR LIFESTYLE

Whether you have pets, or are extremely active or consider yourself a foodie–these factors can all influence the areas in which you might want to live. So take a second to think about all the things that are important to you, Rinomato says. Maybe you want a short commute, or want to be in close proximity to a dog park, or restaurants and shopping centres. This should be the first thing you do after figuring out your financing and having an idea of what you can afford.

WALK SCORE

If you don’t own a car or plan to rent the property out in the future, a solid walk score can go a long way (the higher, the better). A walk score is based on your ability to walk from the property in question to things like banks, transit, shopping centres and so forth. Rental tenants can be lured in by a high walk score, and it’s generally a plus to know that convenient services aren’t very far away.

SCHOOL DISTRICT

It’s really easy to move into a new home and then realize it’s nowhere near or a school, or the kind of school you wanted to enroll your children into. Fortunately, there are many resources available online that can show you what kinds of schools are in your area (Ontario’s is right here).

EMERGING NEIGHBOURHOODS

By the time you have everything sorted–the neighbourhood, the school, the walk score, etc.–you might realize there’s no property that checks all of your boxes. Don’t worry, that’s normal. But often, it means sacrifices have to be made and you may have to look outside of your ideal neighbourhood. If this happens, Rinomato has some advice for how to find emerging neighbourhoods, where costs are still low but will rapidly rise in the future. The best way to find these spots is to look at the periphery of areas that are already hot and popular. As the population grows in the core, development will spread to the fringes.

Source; theloop.ca – FEB 26

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Cities outside Toronto cannot charge land-transfer tax, Ted McMeekin says

Ontario Municipal Affairs Minister Ted McMeekin: "It is clear that there has been no call for a municipal land transfer tax."

Homebuyers outside Toronto no longer have to worry about paying thousands of dollars in local land transfer taxes.

Municipal Affairs Minister Ted McMeekin shut down speculation Tuesday that cities and towns would be given permission to bring in their own such levy in addition to the provincial land transfer tax.

“There has been no call, at all, for a municipal land transfer tax, nor is there any legislation before the House that would allow this,” McMeekin said in the legislature’s daily question period.

Toronto will remain the only Ontario city allowed to charge a land transfer tax, he added, but offered to look at “what possibilities exist” for other new sources of revenue to help strained municipal budgets.

 

McMeekin’s surprise announcement followed a push against a local land transfer tax by the Progressive Conservatives and the Ontario Real Estate Association’s “don’t tax my dream” campaign, arguing it could push house prices further out of reach for many families.

“I’m glad the minister made the right decision,” said Conservative MPP Steve Clark (Leeds-Grenville), blaming the government for floating the idea earlier this fall and crediting a “grassroots” efforts with stirring up opposition.

 

McMeekin had said earlier this fall during consultations with local governments that any new revenue powers for them would be optional and did not rule out a land transfer tax.

The Association of Municipalities of Ontario said it wants local councils to have “discretionary authority” just like what Toronto enjoyed in levying its own land transfer tax to raise revenues for services, transit and other infrastructure.

“Ontario municipalities face significant fiscal challenges, just like Toronto,” AMO president Gary McNamara said in a statement after McMeekin’s announcement.

“In many communities, property taxes are poorly suited to the burdens that communities face. We all need to look at new solutions that will work.”

McMeekin suggested local governments could do more in the way of development charges as “a potential significant source of revenue.”

Clark and the Ontario Real Estate Association had warned home buyers would have to dig much deeper into their pockets if local land transfer taxes were authorized.

“This is a huge win for Ontario’s home owners and those who dream of one day owning a home,” said Patricia Verge, president of the real estate group.

In Toronto, the buyer of a $450,000 home pays a total of $10,200 in land transfer taxes: $5,475 for the provincial levy and $4,725 to the city. The city tax was added in 2006.

Source: Toronto Star  Queen’s Park Bureau, Published on Tue Dec 01 2015

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Land transfer tax poised to go province-wide, real estate association warns

Toronto’s dreaded Municipal Land Transfer Tax could soon be a province-wide reality.

In a release posted on its website, the Ontario Real Estate Association (OREA) says the government is poised to allow municipalities across Ontario to implement their own respective versions of the tax.

“The Ontario Ministry of Municipal Affairs and Housing has indicated that they are going to make buying a home even harder by giving every municipality province-wide the power to charge a Municipal Land Transfer Tax, a change that will double the land transfer taxes consumers have to pay on their next home,” OREA stated.

The city of Toronto implemented the tax in 2008. It works out to an extra $10,000 to $15,000 on a home priced at about $450,000, with half of the revenue going to the province and the other half going to the city. The city pulls in about $300 million annually from the tax.

OREA urges Ontario residents to visit www.donttaxmydream.ca to learn more about the perils of the tax spreading province-wide.

The group’s president, Patricia Verge, said the move would break an election promise and place an unbearable financial strain on families.

“The Ontario Liberals wrote to us in May 2014, during the election, stating that ‘they had no plans to extend these powers to municipalities.’ ”

“Ontario home buyers are already charged a provincial land transfer tax, so by adding a municipal tax, they’re essentially doubling the tax burden on Ontario families,” Verge said in the release.

“If the Ontario Liberals follow through with this plan, home buyers will be forced to pay $10,000 in total land transfer taxes on the average priced home in Ontario, starting as early as next year.”

The province’s minister of municipal affairs and housing told the Financial Post a final decision hasn’t been made, despite OREA’s insistence.

“We are currently reviewing the Municipal Act. No decisions have been made,” said Ted McMeekin, who added that public consultations on the matter are still ongoing until Oct. 31.

Source: 680 News Posted Oct 27, 2015 4:12 pm EDT

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