How cottage property assessments lead to higher property taxes
The week following the Coalition after Property Tax Reform’s (CAPTR) annual meeting a couple of weeks ago, MPP and conservative finance critic Tim Hudak posed a question about the fairness of the Current Value Assessment system to finance minister Dwight Duncan in the Ontario Legislature. You can view the exhange in the excerpt from Hansard, below.
The problem is that while higher assessments may not lead to higher property taxes, assessments that are higher than average do lead to higher property taxes. And higher-than-average assessments are exactly what most waterfront property owners are now facing. Worse, those assessments are locked in for four years. As Tim Hudak points out, there will be no relief until the next assessment in 2012, even if market values fall.
Bob Topp, chair of CAPTR, offers an example of the relationship between property assessment and assessment-related tax:
“Say the average increase for your municipality is 20%, the same as the average for the province. The increase for your home is 35%. This will mean an assessment-related tax increase. The increase will be 135/120 or 12.5%. That increase will, under the new four-year cycle, be phased in over the four years, 2009 to 2012, meaning an average annual tax increase due to assessment of 3.1%. In addition, you will also have to pay your share of the municipality’s spending increase. If that averages 4% a year, it means your total annual increase will be 7.1%.
“The example used here of a 35% assessment increase is not extreme. Some 1,000,000 properties in Ontario, or almost one quarter of all properties, have increases greater than 30% in the 2008 assessment.”