Property taxes are a necessary, though disliked part of owning property in Ontario. Anyone in Ontario who owns land or a property has to pay a certain amount of tax to the municipal government. Although these taxes are unpopular, as all taxes are, property taxes are important because they are the main revenue source for Ontario’s municipalities. Property taxes are separate from other forms of taxes, and the amount that each person owes is based on a unique assessment for their particular property and the tax rate of the municipality the property is in.
How property taxes are determined for each individual property is quite simple. Each municipality within Ontario has its own municipal tax rate, which is determined based on the municipality’s budget and expected revenue. Each municipality also has an education tax rate, which helps to pay for schools and related services within the municipality. These education tax rates can vary within a municipality, depending on where a property is located in relation to schools. On an individual level, every property in Ontario has an assessed value based on property assessments that are carried out periodically. In order to find the total amount of property taxes owed, a simple formula is followed. The municipal tax rate is added to the education tax rate that is applicable for the particular property (and in some cases other taxes are applied as well), and then the result is multiplied by the property’s assessed value. The resulting amount is the total property tax that you will owe for the year. For clarity, an example is below:
Property’s Current Value (by assessment): $285,000.00
Total Tax Rate: 1.05%
Property Taxes Owed: $2,992.50
It can be tricky to find details of the municipal tax rate in your area, especially since it can vary on what type of property you own, but there are also estimators online to help you with your budgeting. When tax time comes you will also receive a notice of the amount you owe from your municipal government, so you do not need to worry about sending in the wrong amount.
If you live in a part of the province that is not incorporated into a municipality, the process for determining your total property taxes is very similar. The only difference is that you will multiply your property’s assessed value by the provincial land tax, instead of an individual municipality’s property tax value. Generally, the provincial land tax is lower than that of incorporated municipalities.
It is important to remember property tax when it comes to budgeting for tax time, and it is always a good idea to use an estimator to get an idea of what you will have to pay, so that you are not caught off-guard by an unexpectedly higher rate.
This article was first published on https://www.teamrealty.ca.