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The Lay of the Land DEVELOPMENTS IN CANADIAN REAL PROPERTY LAW

Should I Challenge My Property Tax Assessment?

Posted in Commercial, Municipal, Property Tax Assessment, Residential
Phillip SanfordTed Cox

Ontario property owners are receiving notices of assessment this year that will serve as a basis for tax collections in 2017 through 2020. Values are set by the Municipal Property Assessment Corporation (“MPAC”) based on estimated January 1, 2016 market values. Municipalities will then use these assessments to determine your property taxes payable.

We are often asked by clients – and our colleagues! – whether there is any point in appealing the assessments. The answer, of course, is “it depends”.shutterstock_491805226

MPAC attempts to assess at a true market value, the value at which a property will sell if it is unencumbered by mortgages, below market leases or agreements that depress or inflate values.

Owners often have a good sense as to the accuracy of the MPAC values if the property has transacted recently or if there have been sales of similar properties. What will be less apparent to assessed owners is the equity or fairness of an assessment. In Ontario, owners are entitled to be assessed at the lower of two values:  the “current” (market) value or, if it is lower, an equitable value. This is a central but often misunderstood aspect of Ontario assessment law. Equity in assessment means this: if “similar” lands in the area are assessed below market value and your property is assessed at market, then yours may be unfairly assessed and you could be entitled to a lower assessment.

For example, an industrial property assessed at the actual market value is over-assessed if the similar properties in the vicinity are assessed at 90 percent of market value. This kind of unfair assessment is sometimes found in the valuations of residential properties but, in our practice, we encounter it more frequently in the assessment of commercial properties which usually present more challenging tasks for very busy MPAC assessors. In these cases, there are of course a great many more and often complicating factors which must then be argued on your behalf in order to establish the unfairness of an assessment.

What should be done when an assessment seems unfair? The first task is to watch the time limits and review procedures. The most common mistake is to wait for the tax bill to arrive – appeal periods have expired by that date. When people need professional guidance in determining whether or not to appeal there are many capable property tax consultants who can assist. Like any other field, there are also some other consultants who are not as capable or as focused on the interests of clients. We can help you find the right consultant if you wish but we do urge clients to approach the consultants at an early stage if there are doubts about the fairness of an assessment.

Assessments should always be considered carefully and challenged when they are unfair.