If you’re in the market to buy a new home, you’re probably hearing a lot about property taxes. And if you already own a home or property, you’re definitely paying property taxes. But you may not know what exactly property tax is or why you have to pay it. From how to pay and what it covers, we’ve broken down all the details, so you understand where your money is going. Here’s everything you need to know about property tax in Ottawa.
What is Property Tax?
Property tax is an annual charge associated with owning real estate in Canada. The amount of property tax varies for each property and is based on the assessed value of the property. Property taxes are used to help fund some of our most critical provincial and municipal services.
Your property tax is divided into two main sections, municipal and provincial. A percent of your property tax will go to the city or municipality in which you live. In the National Capital Area, municipal property taxes are determined by the City of Ottawa. The provincial portion of your taxes goes towards education and is the same throughout the province of Ontario.
How Are Property Taxes Determined?
Residential property taxes in Ottawa are based on the assessed value of your home, the municipal tax rate, and the education tax rate. Normally, the Municipal Property Assessment Corporation (MPAC) performs an evaluation of all properties in Ontario every four years. But, to provide stability during the pandemic, the Ontario Government has delayed the scheduled 2020 assessment update. As a result, all properties are still being assessed at the 2016 rate for the 2020-2024 taxation years.
To determine the value of a property, MPAC studies recent sales of comparable properties in the area. If you would like to know more about your home’s property assessment, you can use MPAC’s AboutMyPropertyTM tool.
It’s worth noting that the MPAC Assessment value can vary significantly from the market value of your home. This means you cannot rely on the MPAC assessment to determine how much you could sell your home for. If you are interested in selling, our team of experienced Ottawa Realtors® can help you set the right price.
What do Property Taxes in Ottawa Cover?
The municipal tax rate in Ottawa is set by the City of Ottawa and is based on covering the cost of municipal services. This includes emergency services, waste collection, public transit, road and sewer maintenance, and parks and recreation facilities.
How Much Will My Property Taxes Be?
Property taxes are calculated by multiplying the assessment value of a property by the combined municipal and education tax rates for the correct class of property. In 2021, the education tax rate for Ontario was 0.153% of the assessed value of the property and the municipal tax rate was set at 0.529126%.
To get a fairly accurate prediction of what your Ottawa property taxes will be, you can use the City of Ottawa’s Property Tax Estimator. You will need to know the amount of your most recent MPAC assessment, the property class and some basic information about the municipal services in your area.
How Do I Pay My Property Taxes?
While you don’t have any choice about whether or not you have to pay property taxes, you do have a choice in how you pay them. You have three options when it comes to paying property tax in Ottawa.
Option 1 – Monthly Payments to the City of Ottawa
Homeowners have the option to set up a pre-authorized debit plan with the City of Ottawa to pay their property taxes. Automatic payments eliminate any worries about making your payments on time, and the smaller payments are easier to manage for many people.
To register for the pre-authorized debit plan, follow the directions on the City of Ottawa website page on Paying Your Property Taxes. Note that your tax account must be paid in full before you can enroll.
Option 2 – Interim Billing with the City of Ottawa
You also have the option to pay your property taxes as they become due. Like any other bill, you will receive a statement and make a payment to your financial institution. There are two interim tax billing dates each year. This means your tax bill will be divided into two large installments. The first one is due in March and the final payment is due in June.
Option 3 – Pay Your Property Tax with Your Mortgage
Your property taxes can be included with your mortgage. A portion of each mortgage payment will be collected by your lender to pay the interim installments as they become due. This option is convenient as it takes the responsibility out of your hands, but it can be a bit more costly than the other options. The lender may charge a fee for this service and you will not earn interest on the money they collect.
Paying property taxes in Ottawa is a necessary part of owning a home. But knowing where your money is going and understanding your options can make it a bit better. Contact us to learn more or to start searching for your new home today.