Fighting your cottage property assessment

Who is MPAC, and how do they determine the value of my cottage?

By Christine Langlois

MPAC, established by the provincial government in 1998, is a non-profit corporation charged with putting a value on each of more than four million prop-erties in the province, based on a current value assessment (CVA). Each municipality sets its tax rate, and then applies it to that assessed property value to come up with the property tax amount. So if MPAC assesses your property value at $300,000 and your municipality sets its tax rate at one per cent, your taxes will be 300,000 x .01, or $3,000.

How does MPAC really know what a cottage property is worth when each is unique and there are few comparables? Bob Topp is critical of the system in place, which requires MPAC to put a value on these difficult-to-assess properties using limited data; however, Larry Hummel, the vice-president of property values at MPAC, explains that the corporation assesses all properties by applying variables from a list of more than 200 possibilities. It’s more complicated to figure out the value of a waterfront property than, say, a house in an inland suburb because there are more variables involved. They include, for instance, the quality of the shoreline: Is it rocky, weedy, gently sloped, steep? Still, 85 per cent of the value of any property is typically found in just five key variables: location (which includes the lake the property is on), size of lot (which includes water frontage), size of cottage, age of cottage, and quality of construction. Hummel is confident that MPAC gets it right most of the time. He says the question to ask yourself when you scrutinize your cottage property assessment this fall is: “Could I have sold my property for that price on January 1, 2008 (the current assessment date for all Ontario properties)?” If the answer is yes, then MPAC did its job.

Should you disagree with your assessment, however, you can request more information—MPAC has a new website where you can view your own and neighbours’ assessments in detail—and you can appeal. But the rules have changed, and so have the dates - click here for more information.

How to appeal your assessment: the rules have changed

By Christine Langlois

Keep watch for your notice of assessment. MPAC is mailing them out over a 10- to 12-week period starting in early to mid-September 2008. You’ll notice that it is more detailed than your last one. For one thing, it will include your previous assessed value so that you can tell at a glance how your assessment has changed.

If you haven’t already done so, register on the MPAC website for AboutMyProperty, which will give you access to a more detailed profile report on your property, plus those of your neighbours for comparison. You’ll be able to see the selling price of properties that have changed hands since they were last assessed, and the variables that MPAC used in their current assessment. The report will list such details as the square footage of the buildings, the water frontage, and whether a property is road or water access. Take note of any details about your own property that are incorrect—the report lists a garage, for example, and the garage has been torn down—then get on the phone to MPAC and ask for a correction. Simple adjustments can be made over the phone until the end of November, Hummel says.

But if, after studying your own and your neighbours’ assessments, you feel MPAC has set your property’s value too high, then you should file a request for reconsideration. (Call 866-296-6722 for the form or download it online.) This request must be filed by March 31, 2009. In a change from previous years, you must file a request before you will be allowed to appeal. No request, no appeal. Since municipalities don’t set their tax rates and budgets until later in the spring, after they get the assessments, your request needs to happen before you even know how your assessment will impact your municipal taxes. Include in your request any information you think will support your case. This might be appraisal reports, photographs, or insurance inspection reports. “Make the job easy for the assessor to correct the value,” Hummel says.

MPAC will send you back a response. If it adjusts your assessment and you accept the adjustment, then you will be required to sign a binding agreement to that effect; however, if you don’t agree or if it won’t adjust your assessment, you will need to file an appeal to the Assessment Review Board (ARB) within 90 days of receiving the response. You will then be sent a notice of when your appeal hearing will be held. The ARB, a provincial tribunal set up to hear property-assessment appeals, conducts hearings across Ontario. Submissions to include in your appeal are similar to what you prepared for the request for reconsideration. The vast majority of property owners choose to represent themselves at appeal hearings because potential tax savings generally aren’t high enough to justify paying for professional help. An adjustment of $50,000 at a tax rate of one per cent, for example, is a savings of only $500.

Appeal rules have changed, too: Now the onus is on MPAC to establish that it has done a correct assessment. Seven days before a hearing, the corporation is required to share its case, including the comparables it used to justify the assessment, in a letter to the property owner. At a hearing, which will typ-ically be in front of a single ARB panel member, the MPAC representative will present its case first. The property owner should be prepared to present any evidence that refutes that of MPAC and be ready to ask questions about the other side’s case. Again, photographs and other materials that make the case for a lower assessment are helpful. In most cases, the ARB panel member will give his or her decision on the spot and make any assessment adjustments immediately. Any reduction that is applied to the current value is carried forward to the next taxation year or, if it is not, MPAC is required to explain why on the next assessment notice.

One seasoned cottager who is looking forward to the new disclosure rules is retired lawyer Robert Bombier, who owns a log building on Lake of Bays near Dwight, Ont. He has appealed his cottage assessments more than a dozen times, so he’s familiar with the old system, in which property owners had to fight for every shred of information to understand their assessment. “Now you’re entitled to full disclosure from MPAC,” he says. “But the onus is still on the owner to demand it. If you don’t ask, you don’t find out.”

Bombier had his first run-in with MPAC after the ARB awarded him a 15 per cent nuisance reduction for abutting Nor’Loch Lodge several years ago. But MPAC didn’t apply the board’s decision to his assessment in subsequent years, forcing Bombier to appeal again and again. Since then, he has also appealed because MPAC made errors in the size of his frontage and acreage, and he’s been successful each time.

In 2005, Bombier noticed a log premium of more than $100,000 on his property-profile report. He requested evidence from MPAC that log construction is more expensive and therefore of higher value and, when he didn’t receive a response, he did his own research. A log-home builder wrote a detailed letter on Bombier’s behalf that said “a log home is no more costly to build than a custom-built frame home using high-quality material,” and that there should be no assessed log premium. The board was convinced and reduced Bombier’s assessment for the 2006 and 2007 tax years from $737,000 to $615,000. “You still have to be vigilant,” he says, resignedly.