Do you pay too much municipal property tax?

When I started on this journey in January, I took the time to really examine ALL my expenses. This had a two-fold purpose.

1. verify my budget for 2010 in order to develop a debt retirement strategy and goal, and

2. reduce or eliminate unnecessary expenses that we didn’t want/need.

Since I’ve been tracking my budget for years (just not very efficiently), I had a fair handle on things. That is until my property assessment from MPAC came in the mail. MPAC is the company who, at least in Ontario, provides you and your municipality with the assessed value of your property in order for the municipality to charge you an appropriate rate of municipal tax relative to your property value. The higher your property value, the higher your tax bill.

Early in the year, my annual assessment package arrived from MPAC, with their declaration my little property was valued at $560,000 on January 1, 2008. (For the record, that’s the year that 2010’s taxes are based on – not just for me, for everyone).

Since I had recently assessed my property in order to buy out my ex-boyfriend, I was pretty confident this number wasn’t in the right ballpark. Last summer a realtor declared the value at $535,000, and the bank appraised it about 20% lower. I learned later that most lenders had introduced this practice after the sub-prime mortgage scare.

The homes on my street are similar. Most are semi-detached, 2-3 bedroom, 90 year old brick, two-storey homes. However, some properties are on a postage stamp, some have bigger yards because it’s a crescent.  I’m in the latter category, with the second biggest yard on the street. Obviously the lot size has some impact on value.

When I received my notice, I took it to my neighbour to see if she had received hers. She lives in a lovely home, with a yard almost as big as mine. From an assessment point-of-view, our homes should be pretty much identical. Her assessment was a lot less than mine. She let me know that she managed to get it reduced the year prior, she also felt her property assessment was too high. What? You had your property taxes reduced?

Gitty on the promise of a lower assessment (and lower tax bill) I came home and went to the MPAC website. They’re pretty good at telling you exactly what to do if you think your property assessment is incorrect!  A few days later I created an account and had the voyeuristic pleasure of looking at the assessed value of other homes on my street and in my neighbourhood. Their comparison tool also gave me information about other properties to let me know if they would be a good comparison to mine or not. I learned how many bedrooms and bathrooms, lot size, did they have central air, etc.

In March I sent in my paperwork to challenge MPAC on their assessment of my property. I had almost forgot about it.

They’ve sent me back a new assessment letting me know my new value for January 1, 2008 (which is this tax year) is $481,000!  That’s an $80,000 reduction! Further, they’ve let me know what the value will be for the next three years, topping out the third year at $504,000.

We property owners are funny. We want our property values to be high if we’re calculating net worth, or if we want to put a for sale sign on the lawn. We want it to be high if we’re consolidating loans and a lender wants to assess our property. We want it to be low if we have to buy out the interests of another party, or in this case, when MPAC comes around for a look see.

For the sake of my property tax bill, I’m thrilled MPAC thinks I have a lower property value.

The cool news is there has to be some kind of financial impact for this, in a good direction. Either the City of Toronto will issue me a credit for the overpayment of taxes for 2010, or they’ll send me a reimbursement for the overpayment. Either way, I’ll have paid too much so far this year. For the record, my tax bill for 2010 currently sits at $4,170.00.  If my property is assessed at about 13% less, does that mean my tax bill will be reduced similarly? That’d be over $500!

The super cool news is this isn’t just a one time windfall. My property is assessed lower this year, next year, and the year beyond. Frankly, this little exercise, which probably took me 2-3 hours in total, will have an impact for many years to come. I kick myself a bit that I was paying too much in property tax already for a couple of years. Although, the last few years the real estate scene was crazy in my neighbourhood. Perhaps it’s better that I waited.

However this turns out, it has to result in some savings for me. I’m happy about that!

Have you ever challenged your property’s assessed value? If so, what was the result? Will you take a look at it now?


7 responses to this post.

  1. We’re waiting on our assesment…we just moved in, so I have a ballpark figure that I am expecting. If it comes in too high, I am going to challenge it for sure. Thanks for the link.


  2. Good for you for talking the initiative to make this request, follow through with it and win. Just think how many folks will merely pay it without realizing they have a voice.


  3. How much did it cost you to get your property assessed? I realize that you did it for another purpose, but would it be worth it to do it with the hope that it could be used to lower property taxes?


    • Hi Isabel,
      Thanks for stopping by. There was no cost to me to sign up to MCAP and to do my own assessment/comparison between my property and other properties to submit to their Board of appeals. It’s an open process that anybody is invited to do.

      The assessed value of your property for municipal taxes is not the same as an assessed value a realtor may give you, or a lender. Nor does one body recognize the assessment of the other. They’re all for distinct purposes, and usually have different results.


  4. Posted by Christy on August 5, 2010 at 11:05 am

    We had the same success with having the assessment reduced at the cottage my husband and his sister own jointly. We managed to have it reduced by about 20%!


  5. Posted by Christy on August 6, 2010 at 6:29 pm

    We were given a credit on the next tax installment.


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