How to lower your property taxes

Save thousands by cutting your property tax bill.

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by

From the Summer 2010 issue of the magazine.

  29

lower your property taxes
Einstein’s general theory of relativity. Lady Gaga’s popularity. Your home’s assessed value. Some things just seem utterly incomprehensible. But solving the property tax assessment mystery is worthwhile: appealing an incorrect valuation could save you thousands of dollars.

Here’s how to do it:

Check for fairness
Property taxes, which pay for most municipal services, are the product of your home’s assessed value multiplied by the local tax rate. You can’t change the tax rate, but you can argue that you have been over-assessed. Begin by checking your home’s assessment report. This is typically a computerized estimate of your home’s selling price, based  on sales information from a particular assessment date. Is it fair? If a similar house on your block sold for much less than your valuation around the time of the assessment date, you may have evidence of over-assessment.

Fix factual errors
Assessments are carried out by provincial agencies or municipalities. If you’ve spotted a factual error on your assessment—it claims you have a two-car garage when you don’t—you can often get this fixed by simply calling the assessor. If there are no clear-cut mistakes, but you still think you’ve been over-assessed, you will need to officially appeal your assessment.

Prepare your case
The more unique your house, the harder it is to value—and the better your chances of winning an appeal. “If you live in a cookie-cutter neighbourhood, assessments are usually pretty accurate,” says William Howse, a Toronto tax lawyer. “But as soon as you get anything unusual in features or lots, or get into pricier neighbourhoods, then the computer can have big problems.” An older or smaller house in an expensive area or proximity to a busy road, railway or school can provide a strong case for appeal.

Compare, compare, compare
Find comparable local homes that sold around your assessment date for less than your home’s assessed value. This will be evidence that your assessment is too high. You’ll need to show a minimum 5% difference between your assessed price and the selling price on three comparable houses to have a good chance of winning.

Chose wisely
Selecting the right comparison houses is the true art behind a successful appeal, says Howse. Pick comparables that are within 100 interior sq ft of your own house (30 sq ft for condos), and ensure the houses  are the same quality as yours. For a formal appeal hearing, Howse strongly recommends hiring a certified appraiser.

What are your odds?
Few homeowners challenge assessments, but of those who do, many are successful. Roughly 45% of Ontario property owners  who submitted evidence of over-assessment last year got their valuations reduced.

29 comments on “How to lower your property taxes

  1. We did this several years ago,pictures,the whole thing. Got a 10% reduction but found that the assessors in future years constantly changed comparable houses and it wasn't worth the hassle of the whole process. It's a tough problem , but more attention should be given to your cost base plus a max percentage increase, all coming home to roost when you sell, when your last bill should be adjusted for the actual selling price and the new owners start off with that same value.

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  2. First of all, why do we have to pay taxes based on current or post sales prices? If house prices are going up, why does the city need more money? They will provide the same amount of service…They should have a balanced budget no matter what the price of houses are. I think as tax payers, we don't complain enough and just pay.

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  3. Not likely, as there is only a short time window after you receive the property assessment in which you can appeal.
    So unless you sold your house before the deadline, you are out of luck. But the new owner can use the sale price for next year assessment.

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