As the demand for homes continues to soar to new heights and prices across many real estate markets in Canada, many home owners are asking the question, what impact will the seemingly limitless pricing of homes have on my property taxes?

For those of us Ontario that are in the real estate profession, property taxes and property value assessments set by the Municipal Property Assessment Corporation (MPAC) is information we as REALTORS® deal with when listing and selling properties for sale.   Most consumer real estate websites such as do not include the annual property taxes nor the home’s current assessed value.  As such, one of the most frequently asked questions that we get asked by potential Buyers that have seen a home, condominium or other property on sites such as is “what the the property taxes?”

For REALTORS®, in the southern Georgina Bay area and elsewhere, our MLS® Systems include mandatory fields that we must fill in including the amount of the annual property tax, the property’s assessed value and the respective years of the information that we are providing.  When I am out showing properties to potential Buyers what the property taxes and how long has this home been listed are always the first two questions I get asked

As a Market Value Appraiser (MVA) for residential properties, one of the many pieces of information that I look at when determining the current market value of a property is its MPAC assessed value.  The MPAC assessed value is the value that municipalities use to determine your property taxes for any given year.  While the assessed value is the critical component that determines how much you will pay for property taxes, we all know that these values are typically lower that what the current market value of your home, cottage or other property is if it were to be listed for sale.  That being said however, MPAC has been on behalf of the Province of Ontario slowly but steadily moving to  “current value assessment,”  a value which based on recent sales and other information is closely to what a property is current worth on the open market.

Over the past several years I have done a lot of research looking at what homes and other properties are selling for relative to the MPAC assessed values.  Homes that are located in a subdivision are often assessed in value not too far off from what other homes in the area have been selling for.  Homes especially in newer subdivisions are similar in size, lot size. style, and finishes.  This coupled with the fact that MPAC has a lot of sales data accumulated on these properties provides them with an abundance of information in which we arrive at an assessed value that is relatively close to a property’s current market value. Based on the extension data I have looked at there is always a pattern and over many years of doing this, in find that homes often sell for a price that is 25% to 35% more than their assessed value occasionally selling for 50%  more than their. assessment plus or minus.

Given the robust market we have experienced in the past year or so with homes selling for prices that are often way over their respective asking prices, the sale price to MPAC assessed value ratio has changed dramatically.  In order to better determine what has transpired, I looked at residential home sales in Collingwood and the Blue Mountains in each of the past 4 years 2017 to 2020 as well as for the first three months of 2021.  For each year I took the total sales, their sale prices along with their assessed values in order to calculate the sale-to-assessed-value ratio as a percentage for each year.  The results are shown in the chart below.  I did exclude from this data newer home sales that were not yet assessed and others where I knew the assessed values were not current and or accurate such as homes that had been extensively renovated or added on to etc.

Back in 2017, residential home prices in Collingwood and the Blue Mountains for the year averaged out to be about 50% +/- over their MPAC assessed values.  Through 2018 those percentages crept up into the 60% to 70% range and rose again in 2019 to a range of 74% to 81%.  The real shift however as you can see, took place last year with homes selling for the year an average of 89% to 99% above the assessed values in Collingwood and the Blue Mountains respectively.  Through to the end of the 1st Quarter of 2021, homes in the Blue Mountains have sold for prices overall that are 138% more than their respective MPAC assessed value for property tax purposes while Collingwood home sale prices are overall 152% above their assessed values.  If I were to include other municipalities in our market area I suspect the results would be the same.

What impact this will have on your property taxes moving forward remains to be seen but it is also not something that homeowners should just shrug off and I have spoken to some who are concerned.  Consumers need to be away of any potential property tax increases some of which may come about as a result of the current prices being paid and this applies even more so to Buyers.

For the past 7 or 8 years I have sat on the committee at the Ontario Real Estate Association that drafts and revises the over 200 forms we use for real estate transactions across the Province.  A number of years ago the Agreement of Purchase and Sale document we use was updated with the follow clause:

Property Assessment: The Buyer and Seller hereby acknowledge that the Province of Ontario has implemented current value assessment and properties may be re-assessed on an annual basis.  The Buyer and Seller agree that no claim will be made against the Buyer or Seller, or any Brokerage, Broker or Salesperson, for any changes in property tax as a result of re-assessment of the Property, save and except any property taxes that accrued prior to the completion of this transaction.

This clause is intended not as a threat rather it’s a notice that serves to advise all parties that as the result of the transaction and particularly the sale price, the property could be re-assessed thus changing the property taxes payable at some future point in time.

My own personal residence (owned by my wife) is located on a quiet cul-de-sac in the Blue Mountains and currently has an assessed value at $318,000.  Last year I built a large detached second garage on the property and this year we are adding a four season sun room to the house.  In the past 6 or 7 months there have been four sales on our street ranging between $685,000 to $1.2 million.  The current MPAC assessed vales of these homes ranges from $312,000 to $557,000.  Three of these sales were well over their respective asking prices so at some point in time their values are sure to be looked at and re-assessed as will our house with the improvements that have been made.

Due to the current market conditions some of which has been brought on by the pandemic, MPAC themselves have stepped back and have postponed their regularly scheduled province-wide assessment update.  Homes that have sold for well over their asking prices and significantly above their current assessed values are sure to be reviewed.  When re-assessments might take effect remains to be seen but things are not likely to remain fixed over the long term when sale prices are clearly out of sync with market values.

If you have any questions about your property taxes or otherwise please feel free to Contact Me.  If I can’t answer or provide the information you need I will be the first to advise you to seek qualified legal or accounting advice if it is required.