"It's the government, so why even bother? -- a lot of that sentiment is manifested in people who should do something," said Ottawa-based Property Tax Consultant, Glenn Lucas, SCV, RPM, CIC, of Property Tax Review Services, who encourages property owners to actively protect their real estate investment.
Too often, the very real estate owners who would benefit from a lower, fairer property tax assessment are the ones who do nothing—even though there is a lot they can do on their own. Did you receive your tax assessment notice, glance at it to see if it was a bill, and, when it wasn't, stuff it into a drawer somewhere? If you are subject to market-value assessment, this may be a dangerous strategy for protecting your investment and the saleability of your real estate.
Lucas cautions that Ontario property owners should not be lulled into a false sense of security by the 4-year phase-in of the latest reassessment which is based on January 1, 2008. He stresses that the quoted average percentage of change on the assessment notice is for 2009. Over the full four-years, the impact may be quadrupled. One assessment notice quotes the 2009 increase as 9.9 per cent, compared to the average of 5.39 per cent for the municipality. That's significant when viewed over the four-year context where the assessment will automatically increase each year by the same amount until 2012.
(Property Assessment multiplied by mill rate equals the amount of tax to be paid each year. Read the online Guide provided by the Municipal Property Assessment Corporation (MPAC) for more information.)
When it comes to requesting reconsideration of your assessment, don't be overwhelmed by the four years. Keep in mind that you are appealing the January 1, 2008 value, which would be applied over four years. Reduce this value and your tax position should improve, along with the saleability of your property.
The deadline for filing a Request for Reconsideration (RfR) is March 31, 2009, so if you want to act in the few weeks remaining, here's an approach to take:
Step One: In the bottom right corner of your Property Assessment Notice, you'll discover a User ID and a Password. Visit AboutMyPropertyTM at www.mpac.ca and log on to the profile for your property. There is no charge for accessing information about your property or filing an RfR. If you can't, or don't want to, go online, or can't find the Notice, call the Municipal Property Assessment Corporation (MPAC) to gain access to the same information and choices: 1-866-296-6722.
Step Two: Check the details and the accuracy of your property profile. Discrepancies may be grounds for reconsideration.
Step Three: Request a Property Report comparing up to 6 properties as selected by MPAC. This report will help you understand how MPAC views the assessment since the selected properties will back up their claim. The burden of proof now lies with MPAC, so you'll see how they use available data as proof of the validity of their assessment of your real estate. In the same request, ask for the Quality of Construction Class for your property and the comparables. This ensures your assessment reflects the condition of your property and that comparables meet similar construction standards. MPAC works on a first come basis and, after March 1, cannot guarantee you will receive this report before March 31, so the next step is important.
Step Four: If you feel the assessment does not treat your property fairly, while you wait for the MPAC Property Report, file a Request for Reconsideration by one of the methods specified by MPAC and on the Form provided online, or phone to arrange to file before March 31, 2009. Lucas says filing on time is more important than finishing all your research before you file. He says there is no requirement under the Assessment Act for any degree of detail in the RfR, so keep things simple and file the RfR with the comment that the assessed value is too high and you'd like to see the comparables you requested (see Step Three).
Step Five: To build your body of evidence, you can view up to 100 Property Detail Snapshots on the MPAC site and obtain a Properties of Interest Report for up to 24 properties. To make this search easier, ask a local real estate professional to provide you with a computer printout of solds and expired listings in your area, for your type of home (bungalow, two storey, condo suite etc.), so you'll have a list of addresses and some details to work from. When assessments are argued, solds in shoulder years are permissible, that is in the year before and after the assessment date. From January 1 to December 31in 2008, many areas saw market value declines, so investigations here may be valuable. In how many cases did properties sell below assessed values? Travelling around the neighbourhood is also a good idea. Look for homes like yours and then check them out on www.mpac.ca. Ask neighbours about solds in the area and you may unearth some interesting facts. (Now you know why neighbours should attend local open houses and continually accumulate local knowledge.) You ask the questions and raise the issues; MPAC provides the answers for your scrutiny. Anticipation is power. Remember that MPAC decisions can be appealed.
"MPAC is not vindictive and it does not involve your neighbours. You are doing it for yourself only—to increase saleability, too," said Lucas when asked about fears the assessment might go up if you speak up. "It is a possibility, but a remote possibility for the simple reason that MPAC is aware that when people put in an RfR they want a decrease. If there is an increase, they usually suggest withdrawal or say they'll apply the increase next time."
Lucas also stresses calm in the face of an inspection. If you say 'no' to an inspection, the burden of proof switches to you. Don't avoid filing an RfR over worry about having a qualified assessor (check credentials) visit your home. If you feel the physical characteristics of your real estate are the issue, an inspection may be essential.
"Most people are afraid of an inspection, but it may be the best thing that happened if is a physical thing," said Lucas, emphasizing that the usual "worst case" occurs when the assessment does not change and the request is withdrawn. "They will not go through [your real estate] with a 'how can I increase this' view, but with a view to how can I decrease this. If they see nothing, they will say so, but they will not go out of their way to see something that would increase the assessment."
Since MPAC uses a computerized broad-stroke method rather than assessing each individual property, they expect those who fall below projected standards to request reconsideration since fairness and good service is the stated goal. For instance, if you live in an area with dramatic value increases or widespread renovation during the boom, but you made few if any improvements to your property, you may benefit from clearing up misconceptions about the condition and value of your real estate. If your assessment went up, especially if it went up more than neighbours', ask MPAC for proof why this is fair.
Lucas makes it simple: "If you do not do something to reduce the amount of taxes over a 10-year period, you'll never get that back, and it will be a real hardship when you cannot afford to pay your taxes, or the market cannot afford to buy your property."