Buying a home in Ontario can be a marvelous experience, but it’s also one that is certainly not without its costs. No matter where you choose to live or how big your home may be, purchasing a home in Ontario will require you to pay property taxes, as well as other fees. So, if you are in the market for purchasing a new home in Ontario, you should take some time to research and find out which areas have the lowest property taxes and which ones have the highest. With that in mind, the following is an overview of just that.

Why Property Taxes are Important

Although virtually no one enjoys paying them, property taxes are actually essential to a functional society. This is because this money is used to fund important municipally-operated services such as garbage collection, recycling, road maintenance, snow removal, libraries, and more. Therefore, paying property taxes is literally a method of allowing any given city to remain functional.

Methods of Calculating Property Taxes

One of the most confusing aspects of property taxes lies in how they are calculated. However, property taxes are calculated in three different ways, which are as follows:

Municipal Tax Rates

These taxes are used to fund the main municipalities in Ontario. The rates you pay depend on your specific municipality; these fees may vary depending on the type of property you own. Moreover, municipalities take the time to evaluate and assess whether or not tax rates should increase to cover all the mentioned services on an annual basis. Therefore, if the costs of these services increase, your taxes will do the same. To learn more about municipal taxes and to use a property tax calculator, visit your municipal government’s website.

Education Tax Rates

On the other hand, education taxes are used to fund the education being offered at public schools (elementary and secondary) in your area. However, due to the fact that provincial governments control public education, these rates are actually set by the province. Also, just as with municipal taxes, the costs of education are assessed each year to determine whether or not the taxes need to be increased.

Property Tax Rates

Lastly, property taxes are general taxes that are used to cover all of the other aforementioned services. These taxes are based on the value of your home, and they are assessed every four years. Specifically, the Municipal Assessment Corporation (MPAC) conducts these property evaluations across Ontario before submitting this information to determine whether the taxes need to be raised. To calculate these taxes, the MPAC multiplies the present year property value with the total tax rate (consisting of a Council-approved City Tax Rate, the City Building Fund Levy Rate, and the Education Tax Rate as the Ontario Provincial Government has set it). These taxes help cover expenses associated with police services, public transit, the fire department, as well as some expenses associated with elementary and secondary education. Lastly, they may also be used to provide property tax relief for those experiencing hardships seniors, those with low income, and people with disabilities.

Ontario Cities with the Highest and Lowest Property Tax Rates

Next, let’s take a look at some cities with the highest property tax rates and some with the lowest. Generally speaking, property taxes are based on things such as the values of homes and schools in your area, where they are located in relation to popular venues, stores, etc., how developed the infrastructure is, and more.

With that in mind, here are 5 of the highest areas for property tax rates in Ontario:

1. Windsor: 1.775679%
2. Thunder Bay: 1.562626%
3. Sault Ste Marie: 1.530970%
4. North Bay: 1.528326%
5. Sudbury: 1.492189%

Here are 5 of the areas with the lowest property tax rates in Ontario:

1. Toronto: 0.599704%
2. Markham: 0.628191%
3. Richmond Hill: 0.653108%
4. Vaughan: 0.665259%
5. Milton: 0.668702%

Rising Tax Rates

With living costs rising across the globe, those who are paying property taxes in Ontario can, once again, expect an increase. Specifically, residents can expect an average tax increase of around 2.0% to City Departments and outside boards & agencies. Additionally, based on the projected costs for municipalities, it has been determined that the residential property taxes will increase by approximately 4.1%.

In the interest of continuing to respond to and protect residents from the COVID-19 pandemic, essential services and infrastructure will remain a top priority in 2022. Therefore, a combined rate increase of 4.98% has been recommended. This means for a household consuming 200 cubic metres of water annually, the average bill in 2022 will now be approximately $824, representing an annual increase of $39.05. Although tax increases are never ideal, the latest increases are essential to help protect both residents and businesses alike.

How Property Tax Policy is Impacted by Real Estate Values

While real estate values definitely have an impact on tax rates and policies, many do not realize that the opposite is also true. Since property taxes are the financial lifeblood of any given city, it makes sense that governmental organizations would do their best to assess all aspects of these systems.

For instance, since the COVID-19 pandemic, housing costs have been rising across the globe. These rising costs seem to be a sign of the signs as they are affecting virtually all aspects of our lives. Either way, since property taxes are proportionate to your property taxes, it only follows that property taxes will continue to increase. Nevertheless, pay rates do not seem to be increasing nearly as quickly, which may create some issues for homeowners in the area.

Conclusion

Overall, the matter of property taxes is presently more complex than it has been in previous years. On the one hand, property costs are the highest they have been in quite some time, which, in turn, will result in higher property taxes. However, as stated, pay rates do not seem to be increasing nearly as quickly as these costs and taxes. So, while these taxes and fees are very necessary, those experiencing financial hardships may want to apply for programs to help relieve their property tax burdens. Moreover, those who are in the market for a home in the near future should consider where their ideal homes are located and how they may be affected by property tax increases in the near and distant future. You should pay special attention to the areas with the lowest property tax rates in Ontario, as well as the highest property tax rates in Ontario.