As we approach the year 2024, homeowners and prospective property buyers in Ontario are facing an impending change that may have a significant impact on their financial planning. The property assessments, which are the basis for calculating property taxes, have not been updated since 2016.
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The Background
The COVID-19 pandemic brought about various changes and delays to just about everything, and Ontario’s property assessment was no exception. To adapt to the circumstances during the pandemic, the Ontario government postponed the 2020 assessment update. As a result, property assessments for the 2023 and 2024 property tax years will be based on the fully phased-in January 1, 2016 current values. This decision allowed the government to extend the postponement of a province-wide reassessment through the end of the 2021-2024 assessment cycle.
The 2016 Benchmark
In 2016, the Ontario government mailed a Property Assessment Notice to every property owner in the province. This notice reflected the assessed value and classification of each property as of January 1, 2016. Remarkably, this benchmark will serve as the foundation for calculating property taxes for 2023 and 2024. So, what does this mean for homeowners?
If you were a property owner in 2016, you may wonder how the property’s value from seven years ago is relevant to your current tax bill. It’s a valid concern, as property values can fluctuate significantly over time. The answer lies in understanding that the 2016 benchmark as a snapshot in time, serving as a reference point. However, prepare yourself for a possible and maybe even significant increase on the next assessment.
Ongoing Property Review
The Municipal Property Assessment Corporation (MPAC) continues to review properties during non-assessment update years. Even though the 2016 benchmark serves as the starting point, many factors prompt a reassessment. According to MPAC, these changes could include:
- Change in Property Ownership or Legal Description: If there has been a change in the legal ownership of your property, meaning you bought and/or sold, you might receive a notice from MPAC.
- Value Changes from Appeals: If you’ve previously filed a request for reconsideration or had an assessment review board decision, and it resulted in a change to your property’s assessed value, this will be reflected in your assessment.
- Structural Changes: Any additions, renovations, or demolition of structures on your property can impact your assessment. A new structure, the removal of an old one, or significant modifications will be considered.
- Classification or Tax Liability Changes: If the classification of your property changes, it can affect your tax liability. Understanding the classification of your property is crucial as it determines your property tax rate.
What to Expect in 2024
As 2024 fast approaches, it’s essential for homeowners to be aware of these factors. With the 2016 benchmark serving as the base, any property changes made since then can lead to increases in your property assessment.
Property taxes are also influenced by municipal budgets and tax rates, which can fluctuate from year to year. Understanding your property assessment is a vital step in the process, as it allows you to make informed decisions about your financial planning and property ownership.
If you’re a prospective buyer entering the market in the coming months, this information is equally important for you. When considering a property purchase, it’s vital to understand not only the property’s current value but also its potential for changes in the near future.
By being proactive and understanding the factors that affect property assessments, homeowners can plan and prepare for any changes that may come their way. Whether you’re a current homeowner or a future property buyer, knowledge is your greatest ally in navigating Ontario’s property assessment system, be prepared.
