Oakville Property Taxes 101
Thursday, July 5, 2012 at 5:37PM
Lindsay Walls

We've all heard the saying that nothing is certain in life except death and and taxes.  This is true even with home ownership.  Before you buy your next home, you should take a look at the overall carrying costs associated with home ownership.  Property taxes are often a major factor.  Your real estate agent should tell you the estimated taxes on a property before you buy.  For those of you who want to dig deeper to understand property tax assessments, I've put together a short tutorial...

Oakville Municipal Property Taxes 101:

 Property Tax rates are based on the current assessed value as calculated by MPAC (Municipal Property Assessment Corporation).  MPAC re-assesses all properties every 4 years however any home can be re-assessed on a one off basis, particularly homes that have undergone extensive renovations and remodels.  MPAC assessments are phased in so don't be surprised if the home you buy has an assessed value lower than it's current market value.  That said, homes that are significantly undervalued or overvalued should be examined in more depth as future property taxes could change significantly.  Often times, a home that has been newly built or extensively renovated does not yet have an assessed value or is assessed based on it's pre-renovation value.  In these cases, the property taxes the home owner is currently paying does not reflect what you can expect to pay once you move in.  

The current tax rate for properties in Oakville for 2012 is 0.938318% of the phased-in assessment value.  As a rule of thumb, you should assume the taxes on any property you buy will be roughly 0.94% of the purchase price.

MPAC (Municipal Property Assessment Corporation) currently assesses property values every 4 years*.  The current valuation for tax purposes is based on the difference between the new assessment base, the old assessment base and the current year.                                                                     

Recent Property Assessment Dates

Taxation Year                    Valuation Date                                

1998, 1999, 2000                June 30, 1996                                    

2001, 2002                          June 30, 1999                                    

2003                                    June 30, 2001                                    

2004, 2005                          June 30, 2003                                    

2006, 2007, 2008                January 1, 2005                                

2009 - 2012                         January 1, 2008                                

The next reassessment will occur in 2012 to value all properties as of January 1, 2012 and will apply to the 2013-2016 taxation years.                                                                 

* Note: These are general dates only.  MPAC will reassess properties if they have undergone renovations, especially extensive renovations, re-builds and re-models.  Properties that have values significantly less than current tax rates (about 0.94% of value) will most likely undergo MPAC reassessment in the near future.                                                                              

What is Assessment Phase-In and How Does it Work?

MPAC evaluates properties based on a phased-in approach.  The difference between the previous 2 assessment bases (in this case, Jan 1 2005 and Jan 1 2008) is phased in over the next 4 years.

Example of Property Assessment Phase-In:

January 1, 2005 Valuation CVA = $200,000

January 1, 2008 Valuation CVA = $240,000

Change in Assessment         = $ 40,000

CVA for Taxation Purposes

Taxation Year     Assessment                                      

2009                       210,000                                

2010                       220,000                                

2011                       230,000                                

2012                       240,000                                

As you can see from the example above, by phasing in property assessments, property taxes in 2012 are actually based on their 2008 assessed value.

Where your property tax money goes:

The tax rate in Halton Region consists of three components. The local municipal portion (City of Burlington, Town of Halton Hills, Town of Milton or Town of Oakville), the Regional portion (Halton Region) and the education portion. The local and regional portions are based on budgetary needs and the education portion is based on the provincial education funding requirements. The residential tax rate is determined by dividing the budgetary needs by the total assessment. Tax rates are determined for each property class.                                                

How property taxes are calculated:

Property taxes are calculated using the property’s assessed value, the municipal tax rates (Region and Local) and the education tax rate.

Taxes are broken down by the following categories:

Education:                       24%                                       

Town of Oakville:             39%                                       

Region of Halton:             36%                                       

Total Property Taxes  = Municipal Property Tax + Education Property Tax

Municipal Property Tax = Assessed Value x Municipal Tax Rate

Education Property Tax = Assessed Value x Education Tax Rate

2012 FINAL RESIDENTIAL MUNICIPAL TAX RATE: 0.938318%

EXAMPLE: a home assessed at $750,000 will have property taxes of $7,037

Note: Current Property Tax policies are subject to change at any time.  While current property tax information is available to home buyers, future property taxes estimates should be made by the home buyer based on realistic property valuations and assume a gradual to moderate increase in the property tax rate.                                                                

The above information is to be used as a guide only.  I am not a tax expert nor do I pretend to be one.  For a more in-depth view on Oakville property taxes and how they work, please contact either MPAC directly or your favourite tax lawyer :)  While no tax guru, I am an expert on the local Oakville real estate market.  If you have a question or would like more information on life in Oakville, I can be reached at lindsay@lifeinoakville.com or 905.484.5162.

I look forward to hearing from you!

Lindsay    

Article originally appeared on Lindsay Walls (http://lifeinoakville.com/).
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