by Al Dharsee
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.