Property Taxation and MPAC Assessment

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.

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 Association (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.

Related & Earlier News:

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:

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).

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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!