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Posted by on Apr 2020 in All Stories, Features, News Updates, Slider, Uncategorized | 0 comments

Changes to the Ontario Property Tax System due to COVID-19

A multi-story rental building

A province-wide assessment of property tax values was to have been undertaken this year. It has been postponed. Read on to see how this will impact Ontario’s non-profit housing providers.

On March 25, the Ontario government postponed the upcoming reassessment that the Municipal Property Assessment Corporation (MPAC) had been working on for the 2021 taxation year. At this time, we believe the assessment will not take effect until the 2022 tax year, which changes the current 4-year assessment cycle to a 5-year cycle.

As a result of the Ontario government’s Declaration of Emergency related to the COVID-19 pandemic, the appeal deadline for property owners who disagree with the assessment of their property has been extended. It is usually March 31t of the applicable tax year, however for the 2020 tax year it has been extended to 16 days after the Ontario government’s Declaration of Emergency is lifted. This, along with the fact that the current valuation will be used for an additional tax year, means that community housing providers might want to consider appealing their property assessments.

Implications for housing providers

Have you ever looked at how much your organization pays in property taxes? Have you considered how the assessed value of your property has increased over the years?

In Ontario, your property taxes for the years 2017-2020 were based on the assessed value of your property on January 1, 2016. If the value determined at that time was less than that determined by the 2012 assessment, the value of your property used to determine your taxes was immediately reduced. On the other hand if the assessed value was higher, the increased value was phased in over a 4-year cycle at 25% per year. This graphic explains the previous, current and upcoming cycles:

2012 assessment: increased value phased in over 2013-2016 tax years. 2016 assessment: increased value phased in over 2017-2021 tax years.
2019 assessment: increased value phased in over 2022-2024 tax years.

If you feel the assessed value of your property is too high but are unsure of how to proceed and are seeking support, consider using a firm that specializes in the tax appeals process (see below). There is no upfront cost as property tax firms charge a percentage of the amount they save you. However given that for many providers these savings would actually accrue to their Service Manager, you should confirm that they are in agreement and would pay the fee. The potential benefit to the provider would arise with the End of Mortgage or End of Agreement in the event that the property tax flow through was altered or ended altogether.

Regardless of whether you choose to seek a review of your property assessment, you should be aware that a number of municipalities are either deferring their property tax due dates, or waiving penalty/interest for varying time periods. Click here to see if your municipality is one of them (this list is updated regularly as announcements are being made on a daily basis).

How the assessed value of your property is calculated:

Potential gross income minus vacancy and collection loss equals: effective gross income minus operating expenses equals: net operating income divided by the capitalization rate equals: the assessed value

Support for the appeals process

ONPHA has built a partnership with Ryan ULC, an experienced tax firm advocating for both large and small non-profit housing organizations to reduce the burden of high assessment values. Two examples of their work:

  • By examining rent and expenses and comparing it against MPAC’s valuation, Ryan successfully reduced an assessment for a 19-building non-profit housing corporation by $30 million resulting in tax refunds over $1.2 million for the last two years of the cycle.
  • A three-building non-profit housing corporation had their assessment reduced by over $1 million with a tax savings of over $200,000 through filing an appeal.

This post is in partnership with Ryan ULC. Visit their ONPHA page to learn more about how they can help you with your property tax assessment.

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