* 2019 Property Tax Rates coming soon *
Municipalities across the GTA typically have budgets completed and approved by April 30 of each year. The province also completes the education levy, which is included in the municipal tax rate, by this time. Tax rates are published after this date and will be updated here once available.
Here are the property or municipal tax rates for 2018 within Durham Region and the GTA. I have included Toronto and other places, as many of my clients express frustration at the higher taxes that Durham residents face when compared to other cities.
The rates listed in some of the communities that are located outside of the GTA might help to placate those who think they have the highest tax rates. The grass isn't always greener!
If you look at the average property in each city, the difference in assessed values for similar properties actually makes our area comparable in municipal taxes paid to other GTA cities.
Understanding the municipal tax process
First, we need to understand that our municipal governments have to provide similar services, regardless of how much our properties are worth. In virtually all budgets, the number one expense is for the salaries of public employees - police, fire, EMS, municipal workers, road maintenance, etc. Those people make roughly the same amount from one community to the next.
In those cities with higher average property values, they can apply a lower tax rate to come up with a similar amount of revenue. Of course, there will be differences based on population size and other factors, but you get the idea.
Without delving too much into the process, they establish a budget, and determine from that how much revenue needs to come from property taxes. They then adjust what is called the millage (or mill) rate of each property type to come up with the amount needed to reach the revenue target.
Changes to the assessment value and rate each year are designed to be revenue-neutral. This means that when your MPAC assessment increases, it will be multiplied by a lower tax rate to come up with the same amount of tax. Of course, this assumes that you haven't made any material change to your property, and also that the municipality hasn't increased it's budget. Budgets do increase, for inflation and changes in service levels.
Toronto vs. Oshawa Taxes
For example, the City of Toronto has one of the lowest rates in the province. That may sound wonderful, but when you take into account that it also has one of the highest property assessment averages, the actual amount of municipal tax you pay there isn't much different than in other places. For example, the average assessment for a single family home in 2016 was $770,000 in Toronto, and in Oshawa, it was $356,000.
- Toronto $770,000 times 0.688% or $5,298
- Oshawa $356,000 times 1.561% or $5,557
Assessments are completed every 4 years by the Municipal Property Assessment Corporation (MPAC). An increase to the assessment value of a home is phased in over a 4 year period, whereas a decrease is applied immediately when calculating taxes.
Also, when you buy a property in Toronto, you must also pay a Municipal Land Transfer Tax on top of the Provincial Land Transfer Tax. This is a particularly heavy burden for this market, as it adds more to the closing costs that need to be saved for along with the down payment, making it even more difficult in one of the most expensive areas for real estate in Canada.
How property taxes impact the average homeowner
Using the information from the previous table, and average property assessment values for 2016 (MPAC statistics), let's see how the average single family home fares:
Of course, these figures only represent averages. On higher-end properties, the rates will have a bigger impact. The rates are also different for different property types, and there are many variations of classes in commercial and industrial properties. If you have a question regarding another type, or another municipality in the area, you can contact me and I would be happy to explain further.