Property taxes are an ongoing cost of homeownership that fund local services such as schools, roads, parks, and emergency services. Understanding how they are calculated and when they are paid will help you plan your budget with confidence.
Property taxes are based on the assessed value of your home and the municipal tax rate. In Ontario, homes are assessed by the Municipal Property Assessment Corporation (MPAC). The municipality then applies its tax rate to that value to determine your annual bill.
For example, if your home is assessed at $800,000 and the tax rate is 1 percent, your annual property tax would be $8,000. The rate varies by city, so a home in Toronto may have a different total than one in Oakville or Mississauga even if the assessed value is the same.
Taxes are usually paid in installments throughout the year or through your mortgage lender as part of your monthly payment. If you pay through your lender, the bank collects funds in advance to ensure your taxes are paid on time.
Property tax assessments are reviewed periodically. If you believe your home’s value has been assessed too high, you can appeal through MPAC, although documentation and comparable sales will be required.
It is important to include property taxes in your long-term budget because they can rise over time as property values increase or municipalities adjust rates.
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