FOCA advocates for fair property taxation on behalf of waterfront residential property taxpayers in Ontario.
“Downloading” by the Province onto municipalities, and hence property owners, is higher in Ontario than all the rest of Canada. This inordinate local funding burden amplifies the unfairness inherent when property value is the sole determinant of how much an individual who pays for a lengthy list of municipal obligations. FOCA believes the provincial government must hasten and broaden the provincial role in financially supporting social services through provincial income taxes, which were only partially addressed in the recommendations of the 2008 Provincial Municipal Fiscal and Service Delivery Review.
The use of current value assessments (CVA), as a means to calculate property owners’ payments for municipal services received, continues to unfairly distribute social costs. There are precedents in other North American jurisdictions for a fairer process, acknowledging that there are municipal services that should not be paid for solely on the basis of the value of one’s property. To use pure CVA to calculate tax obligations amounts to a tax on unrealized capital gains.
Understand that property assessment is just one component that affects your property taxes. If you feel the valuation for your property is wrong, consider challenging it, as described below. Learn more below, about what affects your property taxes, and what you can do about it.
Read onward, or jump to additional taxation sub-topics on this webpage:
The Foreign Homebuyer Ban (federal) & Foreign Homebuyer Tax (provincial)
FOCA provides the following update for information purposes only, and not as legal or taxation advice; consult a professional about your own situation.
About the Underused Housing Tax (UHT):
March 30/2023 – Underused Housing Tax UPDATE: If you owned some types of residential property in Canada on December 31, 2022 and are neither a Canadian citizen nor a permanent resident: “even if your ownership of the property qualifies for an exemption and you do not owe any tax, you still must file a return” according to the Canadian Revenue Agency (CRA). Additionally, Canadian partnerships and corporations that are title-holders of residential property may need to file as well.
Affected property owners should consult the CRA information about their specific situation, but generally:
- This week, FOCA learned that penalties for late filing and interest will be waived in this transitional year, provided the return is filed and any UHT is paid by October 31, 2023.
- Non-Canadians who need to file the UHT form should apply to CRA for an Individual Tax Number (ITN) as soon as possible. These requests can take up to eight weeks to process, so the sooner you can start that process the better. This number will be needed for any future dealings with the CRA, such as UHT filings, so please remember to store your ITN safely.
- To get an ITN you need to complete the application form and mail it along with the applicable government ID (certified or notarized copies).
- Complete form T1261 for the Underused Housing Tax.
- Should you object to any late filing or other penalty levied, you can file an objection through taxpayer relief provisions available.
Consult this government UHT webpage outlining who is “excluded” and who is “affected” by this tax, which is assessed annually as 1% of the property value. Note: you won’t be able to use the CRA’s UHT Designation Tool if you are water-access only or your property does not otherwise have a postal code. Below are 2 additional links provided by the Office of the Minister of National Revenue. Also read the earlier news, below, for more background on this subject.
Also, download a 2-page info sheet (PDF) with a great overview of the issues surrounding UHT and who it applies to, from Accounting KW, June 2023.
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Related & Earlier News:
Since May 2023, US Congress members led by Western New York Congressman Brian Higgins have been pressing for exemptions from the UHT for American owners of summer residential property in Canada. To date, over 400 Americans have responded to the Congressman’s survey asking for details on how this tax affects them. Access the survey here. Read Congressman Higgins’ June 2023 brief to the Canadian House of Commons Standing Committee on International Trade (PDF, 10 pages).
January 26, 2023 – Underused Housing Tax (UHT): Last year, FOCA pressed the government for clarity about the new UHT (that was implemented by the federal Department of Finance effective January 1st, 2022 and is payable at tax-time in 2023), asking that seasonal owners be excluded from this tax (1% of the property value, annually), and the government did eventually bring forward an exemption for Canadian owners of vacation or recreational properties, with certain conditions. Nevertheless, cottage owners who are neither Canadian citizens nor permanent residents may still be affected. Amazingly, there is still no posted information about how to file a return, and FOCA’s latest inquiry (January 17) has gone unanswered.
Feb.8, 2023 – The Underused Housing Tax affects more people than expected (Globe & Mail)
July 12, 2022 – As a cottager do I have to pay the Underused Housing Tax? (Cottage Life, quoting FOCA)
July 12, 2022 – US Congressman Higgins requests meeting with Canadian Finance Minister Chrystia Freeland to address Underused Housing Tax (Niagara Frontier Publications; WNYpapers.com)
June 29, 2022 – Canada’s new Underused Housing Tax Act receives Royal Assent (Ernst & Young)
March 2022 – Since mid-last year, FOCA has been expressing concerns about the new Underused Housing Tax (UHT) which was implemented effective January 1, 2022 by the Canadian federal Finance department, and will be assessed/payable in 2023. FOCA’s concern was that secondary property owners (“cottagers”) could be unfortunately and mistakenly penalized by a federal policy that is really designed to free up rental and other accommodations in population centres (mostly urban) that are facing housing shortages. It is now clear that Canadian owners of secondary properties will not be impacted by this tax; however it remains unclear for American and other foreign owners of rural waterfront property in Canada. FOCA remains vigilant on this issue. Read related information here:
- Federal Government Releases Draft “Underused Housing Tax” Legislation (Thorsteinssons LLP; Jan. 2022)
- Underused Housing Tax (UHT): New Proposed Tax for Non-Resident Property Owners (DJB Chartered Accountants; Oct. 2021)
- Government of Canada consultation on the UHT (2021)
Also, here is a March 2023 update about the UHT from our legal colleagues at BLG who supplied the following information to FOCA: The Minister of National Revenue announced the following in the Economic and Fiscal Update 2021 released on December 14, 2021: “Furthermore, the government plans to bring forward an exemption for vacation/recreational properties, which would apply to an owner’s interest in a residential property for a calendar year if the property: (1) is located in an area of Canada that is not an urban area within either a census metropolitan area or a census agglomeration having 30,000 or more residents; and (2) is personally used by the owner (or the owner’s spouse or common-law partner) for at least four weeks in the calendar year.” Currently, the proposed Underused Housing Tax Act (the “Act”) does not explicitly contain this exemption. However, it does give the Ministry of Finance the ability to create “prescribed” classes of property by regulation, and also to create new exemptions that apply if a property “is located in a prescribed area and prescribed conditions” are met. It is possible that the announced exception is therefore intended to be contained in this regulation, but no draft regulations have yet been issued. In other words, this exemption may be addressed by regulation at a later date. We are expecting to see fairly comprehensive regulations issued after the Act is implemented, as many details of the Act are left to be prescribed. Until this exemption is prescribed by regulation, however, it is still possible that cottage owners who are neither Canadian citizens nor permanent residents will be subject to Underused Housing Tax if they do not fall within another exemption under the Act. That said, note that just like the Act itself, which as drafted will be effective retroactively to January 1, 2022, it is possible that the regulation will be retroactive to January 1 as well.
2023 Property Tax update from the Municipal Property Assessment Corporation (MPAC):
- due to the COVID-19 pandemic, the Ontario government postponed the 2020 Assessment Update
- property assessments for the 2022 and 2023 property tax years will continue to be based on January 1, 2016 current values
- as soon as an assessment announcement is made, property owners will be made aware.
The ongoing assessment postponement does not change the work underway to maintain the extensive property database and annual assessment rolls. As part of MPAC’s role to assess and classify more than 5.5 million properties across Ontario, they produce an annual report to discuss all their activities that support municipalities to make informed decisions about their community, including the distribution of property taxes. Since MPAC’s last report, Ontario has grown by approximately 100,000 new properties and they have added more than $37 billion in new assessment from new construction and improvements to existing properties. You can read the 2022 report here: https://news.mpac.ca/2022-municipal-partnerships-report.
MPAC also provides many services that help municipalities to maintain accurate records, including updating address, ownership, and school support changes, maintaining voter information, classification changes (including exemptions), tax applications, as well as severances and consolidations.
More information on property assessment and taxation is available from MPAC here: https://www.mpac.ca/en/UnderstandingYourAssessment/PropertyAssessmentandPropertyTaxes
According to MPAC, the ongoing assessment postponement does not change the work underway to maintain the extensive property database and annual assessment rolls. As part of MPAC’s role to assess and classify more than 5.5 million properties across Ontario, they produce an annual report to discuss all their activities that support municipalities to make informed decisions about their community, including the distribution of property taxes. Since MPAC’s last report, Ontario has grown by approximately 100,000 new properties and they have added more than $37 billion in new assessment from new construction and improvements to existing properties.
Read related MPAC reports: 2022 Annual Report and 2022 Municipal Partnerships Report.
A reminder: as a property owner you have the right to dispute the MPAC valuation of your property every year through the Request for Reconsideration (RfR) process (read more about that process, below). During 2022, MPAC completed a total of 10,069 RfRs and of these, 5,070 led to a change to the current value assessment of the property. Note that MPAC assesses the value of over 5.5 million properties in Ontario each year.
MPAC also provides many services that help municipalities to maintain accurate records, including updating address, ownership, and school support changes, maintaining voter information, classification changes (including exemptions), tax applications, as well as severances and consolidations.
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The slides of a 2022 MPAC presentation about property assessments trends in cottage country are only available to members of our Member Associations & current Friends of FOCA (our annual supporters).
If you are already registered on the FOCA website, please login below with your Username and Password.
Need help with your login? Contact us for assistance during business hours. Not yet a Member Association? Find out why you should be!
Get more information from FOCA below, about MPAC assessment and how to challenge your assessment.
Other Taxes & Regulations of Note:
Related News: Jan 4, 2023 – Federal and provincial legislation that cottagers should pay attention to (Cottage Life) – an overview about the Non-Resident Speculation Tax; Bill 23; Bill 109; Bill 39; Underused Housing Tax (UHT); and the Prohibition on Purchase of Residential Property by Non-Canadians Act.
About the Foreign Homebuyer Ban (federal) & Tax (provincial):
Jan 4, 2023 – Foreign homebuyer ban: What it could mean for markets where the new rules don’t apply (Global News) – “Canada’s two-year ban on non-resident buyers, which came into effect on Jan. 1, doesn’t apply to every buyer, every kind of property or every market in the country. For instance, the federal government confirmed in the legislation introduced late last year that the ban on non-resident buyers doesn’t include recreational properties like cottages…”
March 29, 2022 – Ford government boosts provincial foreign homebuyer tax to 20%, applying it provincewide (CBC News) – where previously it was 15% and only applied to properties in the Greater Golden Horseshoe region.
related: April, 2022 – Ontario expands foreign home buyers tax (KPMG)
About the Municipal Property Assessment Corporation (MPAC)
March 2023 – for an overview about the role of MPAC and how your property assessment is made, watch this one hour video:
“MPAC 101 – The Role of MPAC in the Property Tax and Assessment System”
You asked, FOCA answers: Property Re-assessment
A member asked FOCA:
We recently did some renovations to the cottage which triggered a reassessment notice from MPAC. I know retail sales prices have gone crazy in this area over the past 18 months. My question: is the new assessed value I received from MPAC based on current (2021) comparables, or 2016 values?
You're missing the answer - it is members-only content!
The following resources are only available to members of our Member Associations & current Friends of FOCA (our annual supporters).
If you are already registered on the FOCA website, please login below with your Username and Password.
Need help with your login? Contact us for assistance during business hours. Not yet a Member Association? Find out why you should be!
Understanding your Ontario Property Taxes
Your property taxes are affected by:
- the education tax rate (set by the Province)
- the municipal budget (established by your Municipality)
- the municipal tax rate (set by your City/Municipality)
- your property’s assessed value (determined by MPAC – see below)
Related News (2014): How Property Taxes Work (Torontoist.com)
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What can you do about your property taxes?
1) Prevent an increase in your municipal tax rate:
Municipal governments across Ontario are currently formulating and approving their annual budgets. Local spending decisions being made early in the calendar year will directly affect your municipal property tax bill. Every property owner and resident should be paying attention. NOTE: the tax bill you receive early in the calendar year is based on an INTERIM rate, but this will change, pending municipal budget decisions. Learn more about how to get involved in your local municipal budget-setting process on FOCA’s Government Engagement webpage.
2) Challenge your property’s assessed value:
The Municipal Property Assessment Corporation (MPAC) is responsible for assessing and classifying more than five million properties in Ontario. These property assessments are what municipalities use to base the property taxes needed to pay for community services. NOTE: The valuation process is intended to work on a four year cycle; however, due to the global pandemic, the cycle of new valuations that would have been sent out in 2020 were postponed. As a result, your property assessment reflects the assessed value and classification of your property as of January 1, 20216, and this will be used as the basis for calculating your 2023 property taxes. MPAC may still have sent you a revised assessment notice in 2022 if you renovated buildings on your property, if you bought or sold a property (or otherwise changed the property ownership), or if a structure on your property was assessed for the first time.
If you feel MPAC has made an error and assessed your property value too high, you may want to submit a Request for Reconsideration (RfR) to MPAC after the next valuation. There is no charge to do this, but you must submit your RfR within 4 months of the date on your MPAC assessment.
Start by reviewing your property’s details on AboutMyProperty, MPAC’s free online web portal. You will have to register with the Roll Number and new Access Key on your Property Assessment Notice for the 2017 to 2020 property taxation years.
If you can find evidence of comparable properties in your area at lower valuations, it will be in your best interests to proceed with an RfR. You will need the User ID and Password included on your last Assessment Notice, or send a written request to:
MPAC
Attention: GRAD
P.O. Box 9808
Toronto ON M1S 5T9
E-mail: enquiry@mpac.ca / Phone: 1-866-296-6722 / Fax: 1-866-297-6703
* Since 2016: Your deadline to file a RfR will depend on the mailing date on your property assessment notice. The previous deadline (March 31 of each year) NO LONGER APPLIES.
For areas of the province where mapping is not available on MPAC’s site, you can search at the municipal level through an address search. If you want to look up a property that is not in your neighbourhood, but still within your municipality, you can enter the address in the property search window to get a “Property Detail Snapshot”.
Please note: the following is archival material, and some links to third-party resources may no longer be active.
It is FOCA’s view that an updated and strengthened EBR can provide better environmental protection, public participation, and provincial government accountability. The LCO is currently seeking public feedback on this important topic. Learn more, and find out how to submit comment to LCO by November 25, 2022: https://www.lco-cdo.org/en/our-current-projects/environmental-accountability-rights-responsibilities-and-access-to-justice/
November 4, 2021 – In their Fall 2021 economic update, the Province announced that “the priority is maintaining stability for taxpayers and municipalities at this time”, and therefore, the reassessments that were scheduled to be conducted for the 2021 and 2022 tax years were postponed. As such, property assessments for the 2022 and 2023 tax years will continue to be based on the same valuation date that was used for 2021. For more, visit MPAC’s (Municipal Property Assessment Corporation) webpages:
November 20, 2019 – Value of more than 800,000 Ontario properties to be reassessed this year (Durham Radio News)
August 19, 2020 – Top Aggregate Producing Municipalities of Ontario (TAPMO) asks Ontario government to increase property taxes on quarries (Equipment Journal)
July 29, 2020 – Ontario government not considering expanded taxation powers for cities (Ottawa Citizen)
July 27, 2020 – Up to $4 billion to be made available to Ontario municipalities from Canada and Ontario, as part of the Safe Restart Agreement (Ontario)
May 20, 2020 –AMO calls on Canada, Ontario for support for COVID-19 emergency expenses (AMO)
May 19, 2020 – AMO and CUPE call on the province and the federal government to work together on much needed financial assistance to Ontario municipalities (Business Wire)
The 2019 Ontario Budget is proposing changes to the Estate Administration Tax Act. Learn more: https://www.fin.gov.on.ca/en/tax/eat/
August 19, 2019 – Why municipalities are worried about the return of “the D word”: Downloading (TVO)
August 1, 2019 – Ontario Cities with the Highest and Lowest Property Tax Rates (and why do they vary from city to city?) (Zoocasa)
April 26, 2019 – Provincial government moving ahead to reduce the amount of money families pay in estate taxes after the death of a loved one (London Free Press)
June 2, 2018 – NDP propose whopping new housing speculation tax (Toronto Sun): “Ontario NDPers say they would work to ensure their version of the tax does not apply to family cottages”
May 19, 2018 – Property tax was never designed to fund provincial programs
(Toronto Star)
BC Vacation Homes / out of Province owners facing punitive taxation
In the February 20, 2018 Provincial budget, B.C. included what the government is calling a speculation tax. It would apply to owners who do not pay income tax in British Columbia. Principal residences are exempt, as are properties with long-term renters. The tax in 2018 will be 0.5 per cent of a property’s assessed value, a rate that rises to 2 per cent for 2019 and thereafter. (Globe and Mail)
August 28, 2017 – Bracebridge mayor explains benefits of proposed HST hike on property taxes; HST increase proposed to help municipal infrastructure costs (Muskokaregion.com)
August 24, 2017 – Provincial leaders reject HST infrastructure solution (Minden Times)
August 2017 – Municipal governments collect only 9% of all taxes. Property taxes can’t keep up with growing local needs, and the Association of Municipalities Ontario (AMO) have identified an almost $5 billion funding gap for the next 10 years to maintain current services and address the infrastructure gap. See the full perspective from AMO http://thelocalshare.ca/
July 5, 2017 – Lower property tax rate based on services received? According to this former appraiser, “Property tax, assessment not easy, but fair: Gravenhurst resident”
(Letter to the Editor, Gravenhurst Banner)
June 2, 2017 – HST hike suggested by AMO as a way to close the $4.9 billion infrastructure gap for municipalities (Postmedia)
April 20, 2017 –Wynne to slap 15 per cent tax on foreign real estate speculators; will roll out a 15 per cent “non-resident speculation” tax to help cool down southern Ontario’s real estate market. (Toronto Star)
April 18, 2017 – Ontario promises curbs on hot housing market within a week (CBC News)
Sousa had asked Morneau last month to boost the capital gains tax rate, but the federal minister made no change in the 2017 Federal budget. On Tuesday (April 18), Morneau shot it down definitively. “Everything we wanted to say about capital gains taxes was in our last budget,” he said.
April 18, 2017 – What governments could do to cool GTA real estate market; Federal finance minister holds urgent meeting with provincial, city officials on reining in house prices (CBC News)
April 12, 2017 – Real estate speculators driving up prices to be target of reforms, Sousa says
(Toronto Star)
April 12, 2017 – Liberals try to fix Toronto’s housing market without sinking it (Ottawa Citizen)
“Engineering a result so precise with something as big and plainly irrational as the housing market is not easy. All the worse if the things you do affect millions of other Ontarians who haven’t lost their minds.”
April 6, 2017 – Ontario Finance Minister wants meeting on house prices with federal counterpart soon (Toronto Star)
March 31, 2017 – In light of the troubling proposals by Ontario’s Finance Minister, FOCA issued this letter to the Provincial and Federal Ministers of Finance, and a media release in early April. With over $750 billion (CIBC, 2016) in inter-generational asset transfer set to occur over the next 10 years (including a significant amount of waterfront property staying within the family), FOCA will strongly oppose any further capital tax burden.
March 20, 2017 – Ontario wants Ottawa to boost tax on real estate speculators – Federal Finance Minister Bill Morneau urged to cool housing market by increasing capital gains tax (CBC News)
March 8, 2017 – Municipalities are responsible to set property tax policy (Elliot Lake Standard)
February 17, 2017 – Expect to pay more tolls, higher property taxes to fund infrastructure (CBC News)
March 2016 – MPAC presented a 2016 Property Tax update to the FOCA Spring Seminar. A copy of this presentation can be made available to FOCA Members. * Note: starting with the 2016 tax year, your deadline to file a RfR will depend on the date you receive your property assessment notice. The previous deadline (March 31 of each year) NO LONGER APPLIES.
February 2016 – See FOCA’s 2016 Pre Budget letter to the Ontario Minister of Finance
August 15, 2016 – Wynne advises Ontario municipalities to consult constituents on new local taxes
December 1, 2015 – Cities outside Toronto cannot charge land-transfer tax, Ted McMeekin says (Toronto Star)
July 24, 2015 – Municipal officials in Fort Frances, Dryden, Espanola and other small rural Ontario towns have dealt with decreased industrial assessments by raising residential taxes, cutting jobs and slashing infrastructure spending. Tax shift: Companies dump burden of taxes on squeezed municipalities (Globe and Mail)