FAQ - Is your assessment fair?

What is vertical equity?

Vertical equity is achieved when the ratio of assessed value to sale price is consistent over an entire range of property values.  This means that properties at the lower range of value and those at the higher range of value are assessed at the same level of market value.

When vertical equity is not achieved, assessments may show a tendency towards progressivity or regressivity.

Progressivity — as market values of property increase, property owners are assessed at proportionately higher levels.

Regressivity — as market values increase, property owners are assessed as proportionately lower levels. The implication of regressivity is that it can contribute to property owners with the least ability to pay (i.e., owners of lower valued properties) carrying a heavier tax burden than owners of higher valued properties.

Why is vertical equity important?

Since property assessments are used to distribute the tax burden by using property values as a proxy for measuring a taxpayer’s ability to pay, achieving vertical equity is essential to providing an equitable base for property taxation to the Province and Ontario municipalities.

How does MPAC measure vertical equity?

To measure vertical equity, MPAC looks at industry measures such as the Price Related Bias (PRB). The PRB coefficient shows whether valuation-to-sales price ratios are systematically higher, lower or steady as values increase or decrease. In other words, it is used to evaluate whether there is bias in the assessed values.  A negative value indicates regressivity, while a positive value indicates progressivity.

How does MPAC know that our assessments are equitable?

MPAC applies industry-accepted practices throughout the valuation process to ensure assessments are accurate and equitable.  MPAC’s Quality Service Commissioner completed a vertical equity review which concluded that there is no evidence of systemic vertical inequity and that our 2016 current value assessments are well within industry standard.

We also have had external evaluators, including the International Property Tax Institute, check our work as well. All of those reviews have shown that our methodology works and our assessments are accurate.

Why is the Toronto Star reporting that the lower value homes are over assessed compared to higher value homes.

The Star shared their data and analysis with us. When we looked at it there were two major issues that led to inaccurate results.

1. They didn’t time adjust their sales. Where markets change over time – appreciate or depreciate in value – adjusting sales is important to ensure that all sales reflect the market conditions as of the January 1, 2016 valuation date. We know that in 2016 alone, the market rose by 20%.
    
2. The sample relied on a significant amount of pre-sale condominium sale prices which on average, were agreed to prior to construction and purchased more than five years before the closing dates. As a result, the sale prices of these condominiums reflected the 2011 market value and not the 2016 market value. 
   
   In other words, the sales of the new condominium units where the sales were registered in 2016 were in fact negotiated almost five years prior when market conditions were considerably different than those in 2016.

What is MPAC doing about vertical equity?

This is an important issue, and it’s one that we’re mindful of. That’s why we are constantly checking our own work to ensure that we get assessments right.

We also have had external evaluators, including the International Property Tax Institute, check our work as well. All those reviews have shown that our methodology works and our assessments are accurate.

We don’t rest on that. It’s a non-stop effort to ensure we get it right, and we have steps in place to stay vigilant. For example -- Valuation staff are trained on how to monitor for inequity during the assessment process and we prioritize for review the sales of properties at the lower and higher extremes of the market. 

Why is my assessed value different than the price I sold my home for?

Your property assessment reflects the market value of your property – the amount it would likely have sold for on the open market – as of the valuation date, January 1, 2016.

This “likely” value is determined in two steps:

1. Looking at many sales to find the typical value for various factors of a home;
   e.g., square footage, location, age of home, quality of construction.
    
2. Then applying these typical values to your home’s factors to get a typical, or “likely” value.

Often, the sale price of a property will not equal the assessed value of that property. It is important to know that one sale does not make a market.

While sale prices of identical properties can differ, market value assessments of identical properties should be the same.

How are sales used to determine assessments?

Very few properties sell right on the valuation date, in this case January 1, 2016. MPAC reviews every sale and, through market analysis, determines factors that capture the market change over time to ‘time adjust’ those sales to the valuation date.

Sales that happen before or after January 1, 2016, may not be indicative of the market conditions at this time, especially in rapidly changing market conditions.

I would like to correct information about my assessment, can I file a Request for Reconsideration (RfR)? (after the deadline has passed)

The deadline to file a Request for Reconsideration for the 2023 tax year has passed. However, you can contact us and we will take your information, review it and make any updates as necessary. If changes are made, you will receive an updated Property Assessment Notice in November.

How can I correct information about my assessment? (after the RfR deadline has passed)

If you have a question about your assessment, please visit the AboutMyProperty online portal to learn more about how your property was assessed, view the information we have on file and compare your property to others in your neighbourhood. You can also call our customer service line at 1-866-296-6722, where we have experts available to answer questions or provide information about how to submit updated information about your property.