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New assessments to reflect rapid rise in real estate values for some
By Cassandra Drudi – Globe and Mail
With reports from Karen Howlett and Jennifer Lewington
Double-digit jumps in assessments and resulting property tax increases are going to stun some homeowners this year, the president of the Toronto Real Estate Board warned yesterday, as a provincial freeze on new property assessments nears its end.
“They’re going to be absolutely shocked,” Maureen O’Neill said. “We’ve had a steadily rising marketplace and the homes are worth a lot of money, but they’re only worth a lot of money if they sell. There’s going to be a lot of people who bought their homes 10 years ago, and aren’t going to be able to stay in them because of the taxes.”
The Toronto Real Estate Board’s reports show the average sale price of a single-family dwelling in Toronto has risen by about 20% over the past three years.
Current property taxes are based on market value assessments conducted by the Municipal Property Assessment Corp. for Jan. 1, 2005, and are determined by comparisons with the average city property value. If the estimated value of a property increases at a rate below the city average, the homeowner’s property tax will decrease. If property value increases at a rate above the city average, the tax will increase.
The provincial government cancelled assessments for 2006 and 2007 after a report by the Ontario Ombudsman criticized the methods used by MPAC, a Crown corporation, to evaluate properties. The revised assessment process is currently under way.
The reassessed values, with a valuation date of Jan. 1, 2008, will apply to the tax years 2009 through 2012. Increases in assessment values will be phased in over four years.
Mayor David Miller stressed that although property taxes may go up for some, the city is not allowed to take in any more revenue. “It is a difficult system because in a neighbourhood that is popular, taxes go up but the city does not get any more money,” he said. “It is a provincial system and we have to live within it.”
Below is the percentage change in average sale price, comparing the fourth quarter of 2004 with the fourth quarter of 2007.
44% Bloor West Village
31% Richmond Hill
38% Etobicoke – Islington/Kingsway
Ontarians facing rapidly rising property tax bills due to skyrocketing real estate prices will get some relief from Queen’s Park’s tax reform
By Jeff Gray
Ontarians facing rapidly rising property tax bills due to skyrocketing real estate prices will get some relief from Queen’s Park, as the provincial budget aims to reform what the Finance Minister called the province’s “unfair and unpredictable” property-tax system.
Businesses in many of the province’s towns and cities will also get a $540-million break â€” phased in over seven years â€” on the business education tax, a chunk of the property tax bill that has long been unevenly applied across the province, which rates varying by up to a factor of four.
Finance Minister Greg Sorbara and his Liberal government have faced a kind of property tax revolt, with calls from Opposition Leader John Tory for a cap, after the province’s ombudsman slammed the system and the Liberals brought in a two-year assessment freeze.
Under the changes in the budget, which come into affect with the next assessment due for 2009, property values will be assessed every four years, instead of annually. Any assessment increases will be phased in, also over four years, allowing taxpayers time to adjust to any sharp swings upward.
The changes mean that a 20% increase in assessment values, for example, would be brought in as 5% a year over the four years. Decreases would be effective immediately, however.
“Every year, property owners don’t have to worry that the assessor got it right or wrong, will I have to make an appeal, how this is going to affect my life,” Mr. Sorbara told reporters before presenting the budget to the House. “This system is going to be fairer.”
In the text of his budget speech, he said his reforms were much fairer than Mr. Tory’s proposed cap, which “would tend to favour the more affluent.”
The Progressive Conservative Leader said the plan was the product of the government “scrambling to put something together.”
Mr. Tory said Premier Dalton McGuinty was only offering a temporary reprieve to struggling homeowners, saying: “You have four years to pack up and leave your home.”
Spiralling real estate prices, especially in many Toronto neighbourhoods, have left some residents scrambling to pay property tax hikes. In some cases, seniors, or others on fixed incomes, worry they may not be able to stay in their homes.
Mr. Sorbara also pledged to reform the system by which homeowners can challenge their property tax assessments, which was criticized by the province’s ombudsman as unresponsive.
Assessment appeals to the Municipal Property Assessment Corporation, long criticized by many as confusing and difficult. The budget outlines changes, including “simplifying” the appeal process and ensuring that more information is shared with applicants.
Business groups and municipalities have long called for reforms to the business education tax, which has rates that discriminate against businesses in many cities and towns, charging them more than in other places.
The lost revenue for education will be replaced by Queen’s Park funding, the government says.
Businesses classified as commercial in Toronto will see their business education tax drop by 22% by 2014, saving $26-million, the budget documents say. Industrial taxpayers will see their taxes sink 19%, saving $205-million.
Others will see steeper tax cuts at least in percentage terms. Commercial property owners in Thunder Bay will see their business education tax sink by 55% by 2014, for example.
NDP Leader Howard Hampton said the tax cut was likely good for small business, but was being phased in much too slowly.
“It may help some businesses in six or seven years from now,” he told reporters. “But in terms of this year, not much.
Contact the Jeffrey Team for more information