Property taxes are based on your home’s assessed value (set by MPAC) and the municipal tax rate, making them a key ongoing cost of homeownership.
Property taxes are one of the most significant recurring expenses for homeowners in Toronto. They fund municipal services, including schools, roads, waste collection, and emergency services. Understanding how they’re calculated helps you budget effectively.
How Are Property Taxes Calculated?
- Assessed value: In Ontario, the Municipal Property Assessment Corporation (MPAC) sets your property’s assessed value based on location, size, age, improvements, and comparable sales.
- Tax rate: Each municipality sets its own rate (the “mill rate”) according to its annual budget needs.
- Formula: Assessed value × tax rate = annual property taxes. For example, a home assessed at $500,000 with a 1% rate would owe $5,000 annually.
What Affects Property Taxes Over Time?
- Property Improvements: Renovations or additions can increase the assessed value.
- Market trends: Rising local property values may lead to higher assessments.
- Municipal budgets: Increased spending on services can lead to higher tax rates.
How Does This Impact Homeowners?
- Monthly budgeting: Many lenders collect taxes as part of your mortgage payment to ensure they’re paid on time.
- Long-term planning: Rising taxes can affect your total housing costs, so factor them into your ownership strategy.
- Appeals: If you believe your MPAC assessment is too high, you can appeal to reduce your tax burden.
The Fox Marin Team helps buyers plan for the full cost of ownership, including property taxes, so there are no surprises after closing. By understanding assessments, rates, and budgeting strategies, Fox Marin clients can make informed decisions with confidence.
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