The McGuinty Provincial Government recently
revised the cycle of re-assessments in Ontario. Whereas
current value assessments ( CVAs) were to be updated on
an annual basis based on the property's market value as
at June 30 of the prior year, the CVAs will now be based
on the market value as at Jan 1 of the prior year commencing
with the 2006 Tax Year Assessment. To facilitate this change,
the 2005 CVAs will be the same as for the 2004 Tax Year.
This means that landlords will once again be asked to file
rental data for the month of Jan 2005 & income/expense
details of their buildings by mid-year.
To-date, the Municipal Property Assessment Corporation (MPAC)
has determined the CVAs for Apartment Buildings by applying
a Gross Income Multiplier (GIM) to the annualized median
rents of the property obtained from the rental data supplied
by the Owners. The GIMs were determined by MPAC's study
of actual sales information for Apartment Buildings in different
areas of the Province and Cities. The sales data was categorized
for different types of buildings (e.g. Walk-ups vs. High
Rises), location, condition etc. and then a GIM determined
for each of the categories.
Using the rental data supplied by the Owner, MPAC first
determines the median rents for each suite type in the building,
adjusts for utilities paid for by tenants, and then using
the median adjusted rents, determines the annualized median
rental income for the property and then multiplies that
with the appropriate GIM to determine the CVA.
For example, an average walk-up in the Old City of Toronto
with an annualized median rental income of $100,000 will
have a CVA of $1,000,000 x 7.4 GIM = $7,400,000
The Municipality then uses the CVA to determine the actual
property taxes payable.
A large number of successful assessment appeals have been
based on the fact that the median rental data used by MPAC
was incorrect, number of parking spaces used was incorrect,
or assumptions made that utilities were paid for by the
tenants when in fact all utilities were paid for by the
landlord. In some cases, several consecutive years of higher
than average operating cost ratios, or actual sales price
of the subject property in the Base Year can be used to
argue that the CVA is incorrect, or challenges can be made
of the GIMs based of the Owner/Agent's own sales study.
All Owners are entitled to receive from MPAC a copy of the
General Property Information Sheet (GRAD Report) for their
property which shows the median rents and GIM used in determining
the CVA. Errors in the data shown on the GRAD Report can
be corrected by talking to the Assessor, filing a Request
for Reconsideration, or if no correction is made before
mid-March, by filing an appeal before March 31 of the Tax
Year to be appealed. Appeals may be filed online at http://www.arb.gov.on.ca.
Al Dharsee, P.Eng
Applecreek Consultants Ltd
905-940-8223
