How to Save Money on Property Taxes

by Mr. Cheap

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When I bought my condo, I got the property tax info, and found out it had been assessed at $155K (and I’d bought it for $126K). When you’re in a situation where the assessed value is clearly higher than the true value of a property, it’s well worth your time getting the assessment lowered (which will bring down the property taxes).

For residential properties, you pay $75 for a formal hearing about the reassessment. Before that happens though, you’re encouraged to contact www.mpac.ca and resolve it informally with them. I got on the phone with the woman assigned to me, sent her info about the purchase and the property. She offered to lower the assessment to $145K, but after I argued some more (and sent photos showing the rough condition of the property) she lowered it to $140K.

I think I could have gotten a lower assessment if I’d gone through the formal process, but it wasn’t worth the extra investment. As it is it took me a couple of e-mails and a couple of phones calls and is saving me about $100 / year (until the next assessment occurs).

If you think you could argue that your property is worth less than its assessed value, I’d encourage you to try to get the assessment reduced.

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{ 15 comments… read them below or add one }

1 Four Pillars

Good advice – I have a friend at work who applies for a reduction every year (and gets it). She has a nice house on a nice street but it’s right beside a subway station and directly across from a parking lot.

It’s worth doing if your house in particular is lower valued than the neighbours – ie you are the closest to a main street/beside a junkyard etc etc.

Mike

2 LiseBise

Since you live in a condo, you could also ask your board to file for a formal hearing for the entire condo property. You won’t have to spend the time. Check with your neighbours. If there’s enough of you who feel are paying too much, the board should be willing to do that for you.

That’s what we did, and we all got reductions.

3 MM

Although it does save you money on your tax bill I’m wondering if it has any perceived reduction in the value of the property at resale

Say you buy a house for 30K below assessment. The house is in good repair, but the owners are separating and need to sell. The resale of the home could easily be above assessment but circumstances not house condition forced them to sell cheaply.

You decide to get reassessed and they happily oblige. When you go to resell the property do you think that would also reduce the perceived resale value of the home as well? I personally always look and consider the two values (and the delta between them), but that’s just me.

4 PK

I faced similar situation few years back. Bought a house in May for 370K and MPAC letter i received later stated that it was worth $430K as for June the same year. I short letter with supporting documentation did a trick. The next assessment was out of a this world again. I had written another letter, talked to someone one the phone and got it lowered again. It only shows how bad assessment software is at “valuating” properties.

5 Mr. Cheap

LB: I considered “threatening” MPAC that I’d do exactly that if they wouldn’t give me a good reduction. They I thought that blackmailing crown corporations might not be the best idea. Great idea just to help out the building (and ideally to get someone else to fight for you if the management is any good).

MM: I was concerned with that myself (and actually tried to use that as a negotating tactic: “you’re asking a lot more than the assessed value”). Everyone *seems* to view the assessed value as something totally separate from the true value (even the assessors).

PK: Good to hear that I’ll be able to fight them again if it shoots up too quickly on the next assessment. Maybe I should have fought harder to get it lowered now (then fought to keep it down)…

6 FourPillars

MM – that’s a interesting point but in my experience in a rising market (in Toronto) everyone knows that the assessments are out of date so I don’t think anyone (except Mr. Cheap :) ) would consider the assessed value when buying a house. In a flat market it might be more relevant.

As long as you are the only bidder it’s a great strategy to try…

Mike

7 Dan

On the flipside to this discussion – is there any risk that MPAC may actually find a property as being assessed too low and *increase* the value instead?

I’m worried that if I call to argue my assessment, mpac may come back and say “wait a minute”, you should be valued at X (a number higher than the current one).

I’m assuming MPAC take into consideration the last purchase price of the home when calculating their numbers?

8 Four Pillars

Dan – that would be quite unfortunate. Perhaps it would be useful to find out what your neighbours pay for taxes before asking for an assessment?

Mike

9 Mr. Cheap

Dan: I think it would be fairly unlikely that they’d just decide to raise your assessment (they do it in “waves” where everyone gets re-assessed at once). If they raised it because you contested it, that would seem pretty punative and I could see people getting angry (I would if I heard they were doing that to property owners).

When you say you want to contest it, they give you access to a system where you can look up properties and see what they’ve been assessed at, so you can easily look at what your neighbours assessments are…

10 fathersez

Oh! I am not sure if we can fight individually in our country.

Here, everyonce in a while, there will be a ruckus raised in the press by people, when the Gomen raises the rates.

But the rates are quite uniformly applied and the valuation is also a little lower than the market prices.

11 Tee

During the last Ontario provincial election, Howard Hampton was promising to freeze the assessed value of a home at purchase price until it’s sold, at which point the value would be reassessed.

Sounds like a great idea.

12 Four Pillars

Tee – I don’t think this is a good idea because someone who bought a house a long time ago wouldn’t be paying their fair share of taxes.

Mike

13 Tim

MPAC has been inflating assessments for some time. Why? most people do not complain. This is bad for everyone. People like to see that high assessment when they are selling. Its not a supporting document people – its a tax grab. I bought a house for 20% less than its assessed value. I complianed and MPAC did exactly what I though – they reduced my property value but not quite 50% of the difference. So off to appeal I go. I just bought it. The house was on the market forever. There is no better way to value a house than a sale. Especially when on the market for months and months. MPAC tries to hide behind a mask but make no mistake – they work to overvalue your house because they are indeed a crown corp. Why do people work for these companies and play their games? MPAC, REV Canada … you get people who are screwing their neighbors … for what? A meager paycheck? That is so very weak. We all know these people. They got picked on in school and now think they have power. But the reality is they now work for the bully – and they do it for cheap! Thats gotta be a sad exhistance. No wonder they are all fat, bald and eventually get cancer.

14 Victor C.

I bought my house in Aug 2007 for $300K, that year the assesment was at $265K. The very next year i got a letter saying that my house value is increased to $315K. WHY??? was it based on the sale price?? well that may be but its still over what i payed for it.. this year i will call and ask to be lowered.. this is ridiculous. All the similar houses in my neighbourhood are around $263-$279K.. so again WHY???

15 Sboyd

I built my home in 2003 – Cost $170k and was assessed as such. Home was reassessed & reassessed until this year. Assessed value $398k. I’ve done nothing in 8yrs except install an above ground pool. I finally appealled my 2008 assessment. They lower by $45k, still not enough, but will i get a tax credit for my overpayments since 2008? Any one receive a tax credit for a reassessment??

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