Property Taxes – How Your Property Value is Assessed

I know that property taxes are a source of frustration for many of us, including me.  I happened upon this article and thought to share it with you all, as I found it very informative.

By Mike Aubry,Ottawa Sun –  First posted: Tuesday, October 09, 2012 04:40 PM EDT | Updated: Tuesday, October 09, 2012 04:57 PM EDT

It’s that time of year again, when the Municipal Property Assessment Corporation will be mailing out new property assessments for 286,000 homes and farms in the Ottawa area as part of a province-wide assessment. MPAC issues a new assessment every four years, and the results will either hike or lower the property taxes you pay on your home each year. Homeowners can expect to see their assessments arrive by mail as early as Wednesday.

To get to the root of the matter, we talk to veteran tax expert John Clark, vice-president of valuation and consulting at the Regional Group of Companies.

Q: How is a home’s value assessed?

A: MPAC does that through a statistical modeling process that is based on market value. MPAC doesn’t visit each home individually, but instead uses a computer formula that looks at a wide range of factors to judge a home’s value. It takes into account the location, lot size, building size and building condition.

Q: Why do assessments happen every four years?

A: The provincial government sets the rules and in different places in Canada it’s done differently. Ontario is every four years, Quebec is three years and some places are every year. But the more frequently you do it, the annual changes become smaller and if you did it every 10 years, the changes would be much more dramatic and more politically damaging.

Q: Why would my assessment go up or down?

A: It’s all a function of how the market is behaving. In Ottawa, some neighbourhoods are becoming increasingly popular, while others haven’t fared so well. It depends on what people are paying for properties.

Q: Which Ottawa neighbourhoods will see increases and which will go down?

A: They’re all going to go up, but some will go up faster than others. Hintonburg, Westboro, the Glebe, Sandy Hill and Centretown are set for a large increase. But some of the rural areas like Osgoode may not go up so fast, and the suburban areas like Orléans, Kanata and Barrhaven will be going up probably about the average. They’re attractive, but they’re not “hot” neighbourhoods in demand.

Q: Does an increase in value automatically mean I’ll pay more taxes?

A: No, an increase in a property’s assessed value only translates into a tax increase if the increase in value is higher than average in Ottawa since 2008. The average increase this year is 25%, or 6% per year.

Q: Can I ask for a re-assessment if I think the numbers are off?

A: Yes. Homeowners should look at other similar properties in their neighbourhoods on the MPAC website. If they feel the assessment is off, they can appeal to MPAC and have the home re-assessed. (In 2009, 4.24% of homeowners asked for a re-assessment for a total reduction of $6.96 billion.)