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Canadian Property Tax Analysis


Under the Government of Canada's uniform fiscal policy, provincial and territorial governments have the autonomy to levy property taxes. However, there is no uniform real estate tax rate across the country because Canadian real estate taxes are local taxes and rates are set by provincial or local governments based on their regional fiscal situation.

At the beginning of each year, local government fiscal governance budgets the total fiscal expenditure for the year, which is then subtracted from revenues other than Canada's property transaction tax, and the difference is the total property tax payment for the year. The real estate tax rate for the year is then calculated based on the ratio of the total taxable amount to the total assessed value of the taxable real estate in the jurisdiction. In Ontario, for example, local councils set property tax rates on an annual basis in seven categories, taking into account inflation, and provide for a low rate for resident property taxes and a high rate for operating property. In general, commercial and industrial real estate is taxed at two to three times the rate of residential real estate.

2013 Estimated Residential Property Taxes per $1000 of Assessment

In Ontario, property taxpayers typically pay property taxes twice a year. Taxpayers usually pay only about 50 percent of the total property taxes for the year at the beginning of the year. By the middle of the year, local governments will recalculate the total remaining fiscal expenditures needed for the year to determine the amount of residual taxes that real estate taxpayers will be responsible for. Every year, the Government issues a detailed report on the collection of real estate taxes, which is open to the public and subject to public scrutiny. These practices, which are consistent with taxation and service, are well received by the people and are conducive to promoting healthy interaction and sound development of real estate tax collection and administration.

When evaluating a home, the government takes into account all factors that affect market value. The following five factors typically account for 85% of a property's value: the location of the home, the square footage of building area and usable area, the age of the building, the quality of the construction, and whether significant alterations, improvements, and additions have been made.

Other factors that affect the value of a property include the number of bathrooms, whether there is a fireplace, whether the basement has been renovated, the number/size of garages, whether there is a pool, the type of heating and air conditioning, etc. In addition, traffic patterns, proximity to street corners, proximity to golf courses, railroad subways, main roads, and the size of the surrounding green space also have an impact on property values.

The City will use the total assessed value of all properties in its jurisdiction as the tax base, but all properties do not include hospitals, schools, and churches. The tax rate is obtained by dividing the annual budget of the municipality by the tax base. Multiply your property valuation by that rate and you get what you should pay in property taxes. For example, if a municipality has a property valuation of $10,000,000 and the municipal budget for next year is $200,000, $200,000/$10,000,000 equals 0.02 or 2%. If your property is valued at $150,000, then your property taxes for next year will be $150,000 x 0.02, which is $3,000. The municipal portion is calculated by the city, while the education portion is set by the provincial government.

Estimating your home value: Comparisons can be made by looking at the value of homes in the same neighborhood and the actual sales price of homes in the same neighborhood.

If you have an objection to the notice of property tax assessment you have received, you can apply for reconsideration with the municipal property assessment company. Specific contact numbers, faxes, mailing addresses, web pages, etc. are listed at the bottom of your property tax assessment notice. The reconsideration is free of charge.

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