How To Estimate Your Property Tax Bill
With the recent shifts in our economy, many households are becoming more meticulous with how they budget for monthly expenses. If you are a homeowner in Ontario, your property tax bill (realty tax bill) is a recurring and unavoidable expenditure. How can you better prepare yourself for your next property tax bill?
Interim Property Tax Bill
In most municipalities, your interim property tax bill will show up in your mailbox in February. It is easy to budget for your interim tax bill – the interim tax bill is always calculated by halving your previous year’s final bill. For example: if you paid a total of $4,000 in property taxes in 2023, your 2024 interim tax bill will ask for $2,000.
Each municipality has different due dates for property taxes, but many municipalities will bill in February and ask for payment in 3 installments: March, April and May. Some municipalities will ask for 2 installments instead of 3.
Final Property Tax Bill
Many municipalities will mail out their final tax bills in May-June, and ask for payment in 3 installments: July, August and September. Again, some municipalities will ask for 2 installments instead of 3.
In order to estimate your final property tax bill, you want to ensure that you track down the most recent Property Assessment Notice that you received from the Municipal Property Assessment Corporation (MPAC) (see sample). MPAC completes a province-wide assessment update every 4 years. MPAC will then send you a Property Assessment Notice, showing your property’s assessed value for realty tax purposes for the next 4 years. Other events, like selling the property, may trigger a re-assessment by MPAC.
Once you have your MPAC Property Assessment Notice in hand, you will need to figure out your municipality’s tax (mill) rate. You can usually find the municipal tax rate on the municipality’s website: see Toronto’s 2023 rates here. Find the tax rate that applies to your property type (e.g., Residential or Commercial) and apply the tax rate to your MPAC assessed property value. For example: If your residential condominium unit in Toronto has an MPAC assessed value is $550,000 for the 2023 year, and the 2023 tax rate was 0.666274%, your final tax bill should have been $ 3,664.51 ($550,000 x 0.00666274).
Of course, your tax bill may also include certain additional fees (e.g., Business Improvement Association (BIA) levy for commercial properties, new account opening fees if you’ve recently purchased your home), but we hope that this information will help you gain a better understanding of how your next tax bill will be calculated.
If you need a lawyer for your closing needs, we are here to help. Contact us for a consultation today.
Author:
Min Ju (Jennifer) Park
Partner