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Since the incorporation of MPAC, all properties within the Province of Ontario have been re-assessed on a four-year cycle. When a new cycle starts, every property owner in the province is mailed an updated Property Assessment Notice reflecting the assessed value and classification of their property as of the valuation date. The new cycle was scheduled to start in 2021 but was delayed due to COVID-19’s pervasive impact on all segments of the economy and on our daily life.
This year, the government was expected to announce a new reassessment date. Although the province is gradually rebounding amidst the lingering consequences of COVID-19, the Ontario government has decided to postpone the planned reassessment for the 2021, 2022, and 2023 tax years. According to the 2021 Ontario Economic Outlook and Fiscal Review, property assessments for these tax years will continue to be based on current values as of January 1, 2016.
Your property is assessed on an ad valorem (market value) basis which is meant to be fair and equitable. Your assessment should adhere to the same process used on properties similar to yours; using the same classification and valuation method. Due to the reassessment delay, current assessment values are increasingly out of date, and rapid changes in Ontario real estate could mean that the assessment is no longer equitable and does not consider the current effects of the COVID-19 pandemic.
1. Property taxes will be levied based on market values prior to the pandemic
The commercial real estate market was hit hard in the wake of COVID-19 and many businesses suffered great financial loss, resulting in a decrease in property value. Despite the significant losses in revenue, properties of impacted businesses will still be assessed based on their January 1, 2016 market values. This value will be used in calculating your property tax burden for the 2022 and 2023 tax years without consideration of the pandemic.
2. Longer review period of assessed value
The postponed reassessment gives tax payers an extended period of time to have their property assessment, which is based on the January 1, 2016 market value, reviewed for potential tax savings opportunities.
The Ontario government has stated that the decision to postpone the reassessment was made with the objective of providing continued stability to property owners and municipalities. However, the uncertainty surrounding the upcoming 2022 provincial election, may have precipitated the delay. Ontario property values are on track to be 8 years outdated by the time of the next reassessment.
With changing real estate market, property values are vulnerable to large value swings in either direction when finally reassessed, which may result in unfair property taxation and serious scrutiny from taxpayers under the current system. It is still unclear when the next reassessment will hold. Given the government’s pronouncements, it appears that the earliest time is likely in 2024.
Contact our Property Tax Specialist to learn more about the postponed reassessment and its impact on your property tax.