Sunday, September 18, 2016
Assessment Only Half the Picture
Updated for the first time since 2012, your notice will outline MPAC’s determination of the market value of your property as of January 1, 2016.
MPAC considers many factors when assessing property values, such as the sale prices of comparable properties in your neighbourhood, and the age, location, characteristics, and size of your property and home. In essence, MPAC strives to base their value on the amount your property could have sold for on the open market.
Just like in 2012, property assessments will remain the same for the next four years – from 2017 to 2020. However, if the value of your property increases, that increase will be phased in over the four years; if the value goes down, you will immediately see a reduction.
For example, if the value of your home increased by $20,000 over its current assessment, the value for determining your property tax will increase by $5,000 per year over the next four years.
If the value of your home goes up, does that mean that your property taxes will also go up?
No, not necessarily. Market Value Assessment is only one half of the property tax equation. The amount you pay to the Town of Pelham, to the Region, and for Education is based on the Market Value Assessment of your home multiplied by the three tax rates and added together.
Say the Town budgeted for revenues of $10 million from property taxes in 2017. If all assessments double, the Town would cut the tax rate in half to collect that $10 million. If everyone’s assessments went down, we would increase the rate to collect the same $10 million.
But, what if your assessed value increases more than the average?
The property tax system is a bit of a blunt instrument. Municipalities set the tax rate based on the average assessment for each of the tax classes – residential, multi-residential, commercial, industrial, farm/managed forest, pipelines.
If your property’s assessed value increases more than the average, you will likely pay more than the average tax. By the same token, if your assessed value increases less than the average, you will likely pay less tax.
What if you don’t think the MPAC assessment on your property is correct? You can issue a “request for reconsideration” before November 30, 2016 for residential properties so that MPAC will review your assessment. (Owners of farm, business, and multi-residential properties must file reassessment requests 120 days from the assessment issue date.)
Please check out MPAC’s website (www.mpac.on.ca) and your notice for more information.