The time of year is fast approaching when lots of people go ballistic about their property tax bill. Soon we’ll be hearing in the mail just how much more we owe to keep the city running another year.
But it could well be worth challenging your property assessment. As I’ve argued in a previous column, you may be surprised how good your chances are of winning.
Many homeowners face increases in 2010 property taxes well above the hike the City of Ottawa is aiming for in its spending. That’s due to inflationary increases in home values, on which property taxes are based.
People love to complain that they are overtaxed, and they especially seem to love to complain that they pay an unfair burden of the property tax bill.
As I wrote back in September of last year, significant numbers of Ottawa homeowners have successfully claimed that the assessed value of their homes was too high in 2009. As a result, they’ll pay less tax this year and in future years.
Latest figures show that about 50 per cent of Ottawa homeowners who contested their 2009 assessments were successful in lowering property taxes.
In many cases, the reduction in a home’s assessed value was about 10 per cent. On a typical property tax bill of $3,000 a year, that’s a tax saving of $300 a year. For high-end homeowners, a successful challenge of their assessment can save of thousands of dollars per year.
The average reduction of 10 per cent was on more than 2,300 Ottawa homes whose owners challenged their assessment last year and then accepted a reduced assessment offered by the Municipal Property Assessment Corp.
MPAC, as it is known, is the independent agency that sets values for all properties in the province, both residential and commercial.
The provincial agency voluntarily lowered assessments on these 2,300 Ottawa homes after the owners showed that similar homes in the same neighbourhood had been selling for less.
In addition, MPAC agreed to lower assessments on about 1,200 homes, and is awaiting word from these homeowners on whether they will accept the reduction.
Even if some of these 1,200 owners reject the revised assessment, MPAC will notify the city of the lowered assessment anyway. Their property tax will be lowered. But in such cases the homeowner still has the right to appeal, to seek a greater reduction.
At last count, 86 Ottawa property owners had rejected a lowered assessment offered by MPAC in 2009.
Altogether, however, that’s about 3,600 property owners who will pay a lower tax bill this year after they requested a review by MPAC. That’s about half of slightly more than 7,000 who sought a review in 2009. In the other half of cases, MPAC upheld its original assessment, after reviewing the facts.
Now is the time of year to think about seeking a review of your property taxes. The deadline for seeking a review this year is March 31.
Marcel Clement, a senior spokesman for MPAC in Ottawa, stressed back in September that the agency wants to know if its assessments are too high. He says the same thing today. “If an assessment is too high, we’ll lower it,” he says emphatically.
That makes sense. MPAC exists solely to accurately assess property values. It gains nothing – and loses credibility – if it fails to recognize mistakes.
Currently, we are in the midst of a four-year period in which all property assessments in Ontario are based on a property’s value in January 2008.
Where a property’s value increased by more than average in the three-year period prior to January 2008, the increased assessment is being phased in over four years, and will not be fully implemented until 2012.
This system was devised by the Ontario government to protect property owners from a large, sudden increase in assessment. But it means some property owners – particularly owners of expensive homes in trendy neighbourhoods, such as the Glebe and Westboro – are currently paying less than their fair share.
Is the current property tax system fair? Arguably, the property tax is the fairest tax we have. Consider this:
- High-income individuals have more ways to avoid paying income tax than the average wage earner. That’s unfair to low-income people.
– High-income people travel abroad more than low-income people, meaning they escape paying any Canadian sales tax while buying and spending abroad. That means others pay an unfair share of sales tax.
– The property tax is the only unavoidable tax we have. There’s no escaping property tax, if you own property. And what’s wrong with taxing someone twice as much if they live in a $500,000 home, rather than a home worth $250,000? (By the way, I see no reason why seniors should receive a break on their property taxes, which some people are demanding, just because they’re seniors.)
In order to make a successful challenge of your assessment, you must be able to show that your home was worth less in January 2008 than its 2008 assessment. That means knowing how much homes like yours in your neighbourhood were selling for two years ago. Current home values in Ottawa are typically about 10 per cent higher today than they were in January 2008.
For information on how to seek a review of your assessment, go to mpac.ca