Note: This 2022 report is an update of our 2021 Ontario property tax findings.
When buying a home, homeowners usually focus on budgeting for the upfront costs – your down payment, closing costs, land transfer tax, and other ongoing costs such as carrying costs, mortgage payments, and utilities. Property taxes are important to add to the list but sometimes overlooked.
Paying property taxes is a financial obligation for all homeowners in Ontario and can cost you thousands of dollars, so it’s important to understand how they may impact your household’s bottom line. Property tax rates vary across the province and are based on the size of municipalities, the council’s operating budgets, and the value of the local housing markets. Larger urban centres like Toronto for example, can offer a lower rate due to the greater number of taxpayers and higher housing prices. A smaller, more rural community will have higher tax rates due to a smaller population and fewer resources for the area.
How Is Property Tax Calculated?
How much you pay on tax is determined by the municipality tax rates and the most recent value assessment of your home, conducted by the Municipal Property Assessment Corporation (MPAC). It is usually evaluated every four years, but due to the pandemic, property value assessments have been frozen until 2024, meaning 2016 levels are still applied. It is still important, however, for locals to be aware of how those value assessments may change when the time comes, due to the growth in many Ontario markets over the last two years.
You can determine the amount you’ll pay in property tax by multiplying your most recent home value assessment from MPAC by the residential rate set by your local municipality. In Ontario, these are based on the following:
- The MPAC-provided assessment of your home’s value. This is based on your home’s characteristics such as the size of your lot, its overall condition, whether or not there have been structural changes or renovations, and whether or not it has a basement or pool. MPAC also takes into account the values of comparable properties in your neighbourhood.
- The Education Tax Rate, implemented by the province of Ontario, the proceeds of which are used to fund regional schools.
- The Residential Tax Rate, which is determined annually by a municipality’s city council.
Which Ontario Municipalities Have the Highest Property Tax Rates in 2022?
To see how tax rates differ and have increased across Ontario, we compiled the 2022 property tax rates for 35 Ontario municipalities. We compared these to the average home price for the area and what the taxes would be on the average $500,000, $1,000,000, and $1.5M home.
Toronto’s tax rate is 0.631933%, so homeowners would pay $7018.18 in property taxes on a home that costs the current average of $1,093,097, the least expensive on the list. In comparison, the average price of a home in Whitby in October is a little less than the Toronto average, but homeowners would have higher property taxes, approximately $11,661.28 per year. It is important to note, that Whitby has average prices almost as high as Toronto and a tax rate nearly twice as high – when comparing a home at $500,000, Windsor has a much higher tax price of $9268.8, while Toronto’s is $3159.67.
A $500,000 budget can go a lot further in areas with higher property taxes than areas with lower rates. For example, property taxes in Sault Ste. Marie are higher than Toronto, but the average price of a home in September was just $291,500. Property taxes are just one aspect to consider when buying a home; it’s also important to consider your lifestyle, financial needs, budget and what city you want to live in.
Compared to 2021, the five municipalities with the lowest property taxes haven’t changed, all of which are located within the Greater Toronto Area:
- Toronto: 0.631933%
- Markham: 0.645017%
- Richmond Hill: 0.670650%
- Vaughan: 0.682784%
- Milton: 0.703456%
The five municipalities with the highest rates are also consistent with 2021’s ranking, and all are located in northern Ontario, with the exception of Windsor:
- Windsor: 1.853760%
- Thunder Bay: 1.634104%
- Sault Ste. Marie: 1.648575%
- North Bay: 1.568182%
- Sudbury: 1.546783%
How Real Estate Value Impacts Property Tax Policy
Higher real estate prices and larger populations tend to mean lower property tax rates, due to the higher number of taxpayers helping to fund the city’s pot and bump the operating budget. Toronto has the lowest tax rate in the province given its population and home prices. Richmond Hill homes are currently at an average of $1,425,852, one of the highest prices in the province, while tax rates are third lowest at 0.670650%. However, cities with lower average prices tend to have higher tax rates. A city’s commercial-to-residential tax ratio also factors into this. Businesses generally pay more than homeowners do in tax, and a higher commercial property tax rate translates to a lower residential rate and vice versa.
If you want to learn more about how property taxes work in Ontario, can check out our property tax FAQ for home buyers.
