Property tax rates vary widely across the province, from around 1.79% in Windsor at the highest end, to just 0.615% in the City of Toronto at the lowest.
Zoocasa, an online brokerage, ranked 35 cities in Ontario based on publicly available tax rate information and provided sample calculations to illustrate what prospective buyers can expect to pay on similarly-valued homes.
According to the findings, it may be a good idea to check out the MLS listings in the following five cities, since they boast of the lowest property tax in the province: Toronto, (0.615%) Markham (0.66%) Milton homes for sale (0.69%), Richmond Hill (0.69%) and Vaughan (0.7%).
“The amount of property tax paid should also be of particular note to buyers moving to a new city, as municipal tax rates vary widely across Ontario; the difference paid annually can be thousands of dollars depending on the size of the city, its council’s operating budget, and even factors such as the health of its housing market,” says Penelope Graham, managing editor at Zoocasa.
In other words, this tax is a carrying cost that prospective homeowners shouldn’t overlook — it can add hundreds to a monthly budget and it’s a cost that never goes away and almost always increases over time, even when the mortgage is paid in full. To calculate how much you can expect to pay annually, multiply the assessed home value by the city council’s set rate.
Cities with Higher Tax Rates Typically Have Lower Real Estate Prices
However, the cities with the lowest property tax rates also tend to have some of the most expensive real estate in the province. And that’s not an accident — cities that have some of the highest real estate also tend to have the lowest property tax. Since the properties are valued so high, the city is still collecting, in absolute dollars, a lot of tax.
“As a main purpose of property tax collection is to generate revenue for cities, individual city councils generally set it at a rate that will bring in sufficient cash to float their operating budgets. However, they have considerable flexibility on this,” Graham says.
On a home with an assessed value of $1 million, you would pay between $6,148 a year in Toronto, up to $6,961 in Vaughan — and the average detached house in Toronto, Vaughan, Richmond, and Markham go for over $1.2 million, and about $900,000 in Milton. (Even condos for sale in Toronto now go for over $600,000, leaving you on the hook monthly at around $300).
Assessed Home Values Based On a Number of Factors
Luckily, the assessed value of a home usually doesn’t line up with its purchase price but is often lower. The Municipal Property Assessment Corporation judges your home based on a number of factors such as lot size, condition and special features like a pool.
So they can afford to have more leeway in keeping property tax rates low, and subsequent hikes slow and reasonable. That also means they get more support for voters.
Want to see what homeowners across Ontario pay in property taxes on homes assessed at $250,000, $500,000, and $1 million? Check out the full ranking in the infographic below.
Zoocasa.com is a real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Homebuyers can browse real estate listings on the website or the free iOS app.