# MPAC REASSESSMENT



## jessoha (Jul 23, 2019)

Hello everyone,

I bought a new/old home for 600,000 the house is currently assessed at 280,000....I love the home but paid a little more than I should have but in the long run my thinking was it didn't matter. 

I was told MPAC is reassessing properties in 2020 and my property will be reassessed. The other homes in my area are all assessed around 280,000 to 350,000 currently. 

My question:

Do you think MPAC will reassess my house at 600,000 thereby doubling my property taxes? I am a bit concerned b/c if so my monthly expenses will go up big time (mortgage plus taxes could be roughly 40% of my net pay). 

I know if I am reassessed the increase is phased in over 4 years...does anyone know if this means MPAC will just increase my taxes by a % with the end rate being what I paid or if the first year will be around what I paid then increased accordlingly?

Super nervous as this makes a big difference in payments and I feel like an idiot..

If my taxes go thru the roof I am also thinking we will stay in the new house for 2-3 years then put the house on the market and try to not lose too much money...I feel like an idiot so please be gentle.


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## Mukhang pera (Feb 26, 2016)

I know nothing of MPAC (I am guessing it has something to do with Manitoba, but just a guess.

But I would not worry, regardless. If assessments somewhere have lagged, I would be surprised to see assessments and tax amounts move in lockstep. 

In BC some years ago I bought a small piece of raw land on an island for $40,000. It was then assessed at $30,000. The next year it was assessed at $97,500, thanks to the really 80s real estate boom. So the assessment more than tripled in one shot, but the mil rate was adjusted and the actual property tax went up very little, which makes sense. Just because real estate prices double should not mean that the budgets of local governments need to double along with it. Similarly, I have lived through a few Vancouver real estate "crashes" or whatever one cares to call them. Property taxes did not crash along with prices.


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## jessoha (Jul 23, 2019)

Mukhang pera said:


> I know nothing of MPAC (I am guessing it has something to do with Manitoba, but just a guess.
> 
> But I would not worry, regardless. If assessments somewhere have lagged, I would be surprised to see assessments and tax amounts move in lockstep.
> 
> In BC some years ago I bought a small piece of raw land on an island for $40,000. It was then assessed at $30,000. The next year it was assessed at $97,500, thanks to the really 80s real estate boom. So the assessment more than tripled in one shot, but the mil rate was adjusted and the actual property tax went up very little, which makes sense. Just because real estate prices double should not mean that the budgets of local governments need to double along with it. Similarly, I have lived through a few Vancouver real estate "crashes" or whatever one cares to call them. Property taxes did not crash along with prices.


test


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## OhGreatGuru (May 24, 2009)

MPAC is the Municipal Property Assessment Corporation for Ontario. It does all the property assessments. I think on a 4-year cycle. When there is a change in value, that change is phased in over the next 4 tax years by the municipality.

An absolute increase in assessed value is meaningless in determining whether your taxes go up or down. It is the amount of increase compared to other properties. Because the municipality takes it's budget; divides by the total assessed values of all properties; and determines a mill rate to apply to each property individually to produce a tax bill. 

_The other homes in my area are all assessed around 280,000 to 350,000 currently._ Those are 3-4 year old assessments. Unless the house you bought is unusual for your neighbourhood, their assessments will go up as well. MPAC/Ontario uses "Market Value" assessments, which I believe most jurisdictions have moved to. Whether or not you will pay more depends on how the increased values compare to average assessment values for the whole city.


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## gardner (Feb 13, 2014)

OhGreatGuru said:


> When there is a change in value, that change is phased in over the next 4 tax years by the municipality.


There's often no accounting for the crazy crystal ball MPAC uses to come up with their assessments -- except when a property actually changes hands at a given value, it is hard to argue that that value is not the fair market value. In the case of the O/P, I would say that his market value sale is more likely to drive up the assessed value of the neighbours, versus the other way around. In the event that MPAC comes up with an even higher number -- which is by no means impossible -- the recent sale at 600K is a solid argument that MPAC's number should not be much more than that.


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## fireseeker (Jul 24, 2017)

OGG has excellent insight for the OP.
Jessoha's property taxes will not double, unless the house was massively renovated and expanded in the last four years.
Assuming its value has changed more or less in lockstep with neighboring properties and the community at large, there is likely to be no meaningful change in taxes.


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## jessoha (Jul 23, 2019)

OhGreatGuru said:


> MPAC is the Municipal Property Assessment Corporation for Ontario. It does all the property assessments. I think on a 4-year cycle. When there is a change in value, that change is phased in over the next 4 tax years by the municipality.
> 
> An absolute increase in assessed value is meaningless in determining whether your taxes go up or down. It is the amount of increase compared to other properties. Because the municipality takes it's budget; divides by the total assessed values of all properties; and determines a mill rate to apply to each property individually to produce a tax bill.
> 
> _The other homes in my area are all assessed around 280,000 to 350,000 currently._ Those are 3-4 year old assessments. Unless the house you bought is unusual for your neighbourhood, their assessments will go up as well. MPAC/Ontario uses "Market Value" assessments, which I believe most jurisdictions have moved to. Whether or not you will pay more depends on how the increased values compare to average assessment values for the whole city.


I don't fully understand your post


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## jessoha (Jul 23, 2019)

fireseeker said:


> OGG has excellent insight for the OP.
> Jessoha's property taxes will not double, unless the house was massively renovated and expanded in the last four years.
> Assuming its value has changed more or less in lockstep with neighboring properties and the community at large, there is likely to be no meaningful change in taxes.


the house has not been renovated or expanded upon...no changes and if anything the property is dated in comparision to others with the same assessment


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## jessoha (Jul 23, 2019)

gardner said:


> There's often no accounting for the crazy crystal ball MPAC uses to come up with their assessments -- except when a property actually changes hands at a given value, it is hard to argue that that value is not the fair market value. In the case of the O/P, I would say that his market value sale is more likely to drive up the assessed value of the neighbours, versus the other way around. In the event that MPAC comes up with an even higher number -- which is by no means impossible -- the recent sale at 600K is a solid argument that MPAC's number should not be much more than that.


so you think mpac will come and assess me at the market value that I paid? just trying to clarify bc i have heard market value does not reflect assessment value...plus given that logic almost every home in my town will have their assessment values doubled...if that is the case I think there will be a lot of foreclosure signs up as who can afford to pay double in taxes


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## undersc0re (Oct 7, 2017)

I am sure you could contest it if yours was taxed more than the homes around you, in B.C. I have felt My property tax was way too high twice, and I sent all my proof of other properties in the area, assessments and previous sold for prices of similar properties. Once they lowered my assessed value by $27,000 and 2 years after that I got it lowered another $50,000. That was just by email, not through the court process.


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## gardner (Feb 13, 2014)

jessoha said:


> so you think mpac will come and assess me at the market value that I paid?


They could easily do that. But that is only part of the picture. If the assessed value of all of the properties in the city also rises, then the share of taxes on your property will be the same as in prior years. There are three components to property taxes:

(1) how much will the city tax everyone this year?
(2) how much are property values changing across the city as a whole?
(3) how does YOUR property value compare to others in the city?

If your value only goes up in proportion to others in the city, and the overall taxes collected by the city is the same, then your share of the taxes will not change.


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## Beaver101 (Nov 14, 2011)

^ All of the above posts rationalizes how MPAC establishes property assessment but the reality is seldom does property assessments go down (but goes up considerably in a hot house market) so that is why the assessment gets "phased-in" to ease the sticker-shock. 

Also, I have yet to see a mill rate going down (maybe for a town up in the NWT). So bottom-line, property taxes will go up otherwise where else to collect taxes to pay for services? It's just a matter of how much ... again the phasing-in should ease the pain abit.


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## jessoha (Jul 23, 2019)

Beaver101 said:


> ^ All of the above posts rationalizes how MPAC establishes property assessment but the reality is seldom does property assessments go down (but goes up considerably in a hot house market) so that is why the assessment gets "phased-in" to ease the sticker-shock.
> 
> Also, I have yet to see a mill rate going down (maybe for a town up in the NWT). So bottom-line, property taxes will go up otherwise where else to collect taxes to pay for services? It's just a matter of how much ... again the phasing-in should ease the pain abit.


i'm just hoping they dont double ...

i used an mpac tool to assess homes that would be comparable and they are all around the same assessment...i think the odds are low that mpac will come in and reassess entire blocks at double the amount...but i could be wring...hoping not.


I also think i might just be worrying about the move in general and am just worrying for the sake of worrying...there was a post earlier this week on questioning the purchase of a home (home buyers anxiety) and i can really relate to that post.


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## like_to_retire (Oct 9, 2016)

jessoha said:


> i'm just hoping they don't double ...


Here's a good explanation of how city taxes work.

ltr


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## jessoha (Jul 23, 2019)

like_to_retire said:


> Here's a good explanation of how city taxes work.
> 
> ltr


Great article...

how do you figure out though if your house has increased more or less than the average? 

i know comparable homes are selling for a little more than I paid...going off the article that means I could be looking at a small tax decrease (im not planning for that though).


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## OhGreatGuru (May 24, 2009)

Beaver101 said:


> ...Also, I have yet to see a mill rate going down (maybe for a town up in the NWT). ...


Out of curiosity, I just checked my tax bills since 2009. The mill rate has gone continuously down. I live in Ottawa, which is pretty typical of medium sized cities. My tax bills, on the other hand, have gone up an average of 2.65% per year in that time. But to address OP's fear, the fact that he just paid double the last assessed value of the house doesn't mean his next tax bill will go up 100%.


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## andrewf (Mar 1, 2010)

The dirty secret of MPAC is that they under-assess all properties to avoid valuation challenges. So long as everyone is undervalued the same degree, taxation is correct (higher mill rate on lower assessed value).


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## jessoha (Jul 23, 2019)

thanks for that info..everyone on here is very helpful!


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## jessoha (Jul 23, 2019)

andrewf said:


> The dirty secret of MPAC is that they under-assess all properties to avoid valuation challenges. So long as everyone is undervalued the same degree, taxation is correct (higher mill rate on lower assessed value).


i like this dirty secret if it means my taxes dont go thru the roof


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## jessoha (Jul 23, 2019)

OhGreatGuru said:


> Out of curiosity, I just checked my tax bills since 2009. The mill rate has gone continuously down. I live in Ottawa, which is pretty typical of medium sized cities. My tax bills, on the other hand, have gone up an average of 2.65% per year in that time. But to address OP's fear, the fact that he just paid double the last assessed value of the house doesn't mean his next tax bill will go up 100%.


can you explain what a mill rate is?


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## andrewf (Mar 1, 2010)

jessoha said:


> i like this dirty secret if it means my taxes dont go thru the roof


Everyone thinks they are getting away with being undercharged but it is just an illusion.


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## andrewf (Mar 1, 2010)

jessoha said:


> can you explain what a mill rate is?


Mill rate is the % tax rate that is applied to the assessed value of the property. Municipalities set the mill rate to arrive at their target revenues, by dividing that amount by the total assessed value of the properties they tax.


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## Beaver101 (Nov 14, 2011)

OhGreatGuru said:


> Out of curiosity, I just checked my tax bills since 2009. The mill rate has gone continuously down. I live in Ottawa, which is pretty typical of medium sized cities. *My tax bills, on the other hand, have gone up an average of 2.65%* per year in that time.


 ... interesting and you haven't noticed a reduction of city services? Maybe civil servants are getting wage reduction. Since your property tax bills have gone up, then the other factor (roll assessment) is driving that increase.



> But to address OP's fear, the fact that he just paid double the last assessed value of the house doesn't mean his next tax bill will go up 100%.


 ... of course not, MPAC ain't stupid. OP has already identified any increase in assessment will be phased-in over 4 years.


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