TAXPERTS PROPERTY SERVICES LIMITED

3. CLASSES OF PROPERTY AND LOCAL TAX RATES

1. CLASSES OF PROPERTY
2. LOCAL TAX RATES

1. CLASSES OF PROPERTY

There were seven main Classes of Properties created in 1997 legislation: Class 1 - Residential; Class 2 - Farm; Class 3 - Managed Forest/Conservation Land; Class 4 - Multi-Residential - - 7 or more self-contained units; The Residential class includes condominiums. Appeals of Residential, Farm and Managed Forest/Conservation Land assessments must comply with the new rule of submitting a Request for Reconsideration to MPAC by March 31, 2009 and then commencing a formal appeal to the Assessment Review Board within 90 days of the mailing of the RFR decision. The cost of an appeal to ARB is $75 and any abandonment, leaving you with the RFR assessed value, must be done in writing using the required “Abandonment Form” on the ARB website, Your filing fee is forfeited if you abandon your ARB appeal. The “current value” as determined on a “sales comparison” basis is the rule which governs what are generally referred to as residential property tax appeals. If your property has a residential component, for example, a commercial/residential-zoned property with a store on the street level and a residential apartment on the second floor, then you are governed by the rule of having to file an RFR to MPAC by March 31, 2009. Such properties are referred to a “divided-usage” or “mixed-usage properties and are subject to the rule for a mandatory filing of an RFR.

EACH CLASS HAS ITS OWN MILL RATE as set by the local municipality such as the City of Toronto. The first 3 classes are governed by the rules relating to residential property appeals. The higher classes are what are generally referred to as commercial property appeals and include: Class 5 – Multi-Residential; Class 5 – Commercial; Class 6 - Industrial; and, Class 7 – Pipeline. Those commencing property assessment appeals for these classes may file an RFR to MPAC which will extend the deadline for filing an appeal to ARB to 90 days after the mailing of the written decision on the RFR. If no RFR is filed, a formal appeal to ARB must be made by the March 31, 2009 deadline and a fee of $150 is payable. Note that other classes governed by these rules include Class 8 - New multi-residential; Class 9 - Office building; Class 10 - Shopping centre; and, Class 12 - Large industrial. All classes 4 and higher for such as commercial, Industrial, multi-residential etc. are valued on the three bases of “Direct Sales Comparison Approach”, “Income Approach” and “Cost Approach” with a combination of the three approaches in many cases. The valuation of these classes of properties is a much more complex process than the valuation of residential properties.

2. LOCAL TAX RATES

Each city or local municipal regions sets its own mill rates for the various classes so as to raise sufficient taxes to meet their budgets. In the prior regime governing through the 2008 tax year, the rate for the multi-residential class was roughly 3 times the rate set for the residential class which was about about .875% mill rate. A property assessed at $ 450,000 would ay about $ 3,940 in taxes. Owners of multi-residential buildings pass on the tax bill to their tenants. With the very high rate set for the multi-residential class, on Toronto apartment units generally valued in the $100,000 plus range per unit, a tenant paying $1,200 per month or $14,400 per year in rent often was paying comparatively more in municipal taxes than an owner of a $ 400,000 home. Homeowners should understand that apartment tenants are as hard hit by the municipal tax system as an owner when griping about their house taxes.

The City of Toronto has yet to set its mill rates. They will be posted at the first opportunity. Our firm guesses with Mayor Miller announcing a 4% tax increase in municipal taxes and with the average assessed value up 21.56% in the City of Toronto that the residential mill rate will come in at about .82%. That is our guess. That means that a home with an assessment on the phased-in system of $ 500,000 for 2009 would pay about $ 4,100 in taxes for 2009. When our firm started handling 2001 residential tax appeals, the residential mill rate was a 1.23%. Since Toronto was enjoying a ‘hot’ real estate market, the mill rate dropped downed towards and then below 1% ending at .875% in 2008. The big increases in assessed values for the 2009 tax year makes us suspect the residential rate will `dip’ to slightly over .81% for 2009 and will certainly do so with the phase-in increases in 2010, 2011 and 2012.

2008 MILL RATES FOR THE CITY OF TORONTO:
Class 1 - Residential	.8749226 %
Class 2 - Farm	.2187307 %
Class 3 - Managed Forest/Conservation Land	.2187307 %
Class 4 - Multi-Residential	.23831990 %
Class 5 - Commercial	4.1197431 %
Class 6 - Industrial	4.3362896 %
Class 7 - Pipeline	2.9737328 %