Paying too much Property Tax?

IF YOU HAVE RECENTLY RECEIVED YOUR 2016 MPAC TAX ASSESSMENT 

READING THIS  COULD SAVE YOU THOUSANDS OF DOLLARS!

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Every four years MPAC sends out a province wide property assessment notice to each property owner in Ontario. The last provincial wide notice was sent out in the fall of 2012 and MPAC is in the process of rolling out the 2016 assessment notice to Ontario homeowners. Lanark County notices will be mailed out April 11th and Ottawa residents will receive their notices starting July 18th.

Ontario homeowners can expect the value of their property to have risen an average of 18 per cent when they get their new assessments as MPAC data shows values rose an average of 4.5 per cent in each of the past four years.

All MPAC assessments are currently based on a January 1, 2016 valuation date. When calculating your new value any increases are phased in over four years using an average market increase in assessed value between January 1, 2012 and January 1, 2016. The full value of a decrease is not phased in but takes effect immediately. The phased-in values for your property should be specified on your Property Assessment Notice.

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I DISAGREE WITH MPAC ASSESSED VALUE OF MY PROPERTY HOW CAN I APPEAL?

If you believe that your tax evaluation is too high you can use MPACs free MyProperty tool to understand how and why your property was assessed the way it was.

You will need your Roll number and Access key located on your Property Assessment Notice to register.

You can register and access the tool by going to: https://www.aboutmyproperty.ca/

Investigate and note the following:

  • Is the assessed value of the property different than similar properties in your neighbourhood?
  • Has the property been incorrectly classified?
  • Is a person wrongly placed on or left off the assessment roll;
  • Is the school support listed correctly?
  • Are other records listed correct? (e.g., wrong lot size, building area)
  • Was the property purchased close to the valuation date for a significantly different amount than the assessed value?
  • Is the value, classification or effective date on the Property Assessment Change Notice or Amended Notice listed correctly?
  • Are there factors that negatively impact the property’s current value, which may not be reflected in the current value assessment (e.g., adjacent buildings which effect value such as rentals or industrial buildings.)

If you feel that your evaluation is incorrect your next step is to contact MPAC and to request the Comparable Properties Report that was used to determine your property value. This report will contain the homes which MPAC picked as the most comparable to yours.

85% of your valuation is based on five key factors.

  1. Location
  2. Lot Dimensions
  3. Living Area
  4. Age of Structure (adjusted for additions or major renovations)
  5. Quality of construction

Rate and take notes on how your home is similar and different from the compared homes using these key factors as a guide.

Perhaps the assessed values used similar type homes but it could be argued they are located in a more desirable location or the comparable properties are on larger lots or have been renovated.

If you recently purchased or renovated your home or secured a new mortgage it is likely the mortgage lender had an appraisal done on your property.  Contact your lender and ask them for a copy of the report.

I can also provide you with a CMA – a Comparative Market Analysis report of similar properties that had recently sold in your neighbourhood.

Both the appraisal and CMA will include comparable properties, photos and the estimated value. If the MPAC value has a higher valuation you can use these reports to help make your case for a reassessment.

To challenge your tax assessment value you need to apply for a ‘Request for Reconsideration’.

The deadline to submit a Request for Reconsideration is 120 days from the issuance date printed on the Property Assessment Notice and this deadline date should be noted on your assessment. The property owner may file an RfR every year if he/she chooses to do so. For non-assessment years the deadline to file must be done prior to March 31st.

There are multiple ways to initiate a Request for Reconsideration:

If writing a letter, please include the 19-digit roll number included on the Property Assessment Notice, the property owner’s full name, address and phone number and the reasons why the assessment may be incorrect. Make sure to include as many reasons as possible as to why your assessment should be lower and key in on the 5 key factors listed above. Also included copies of your home appraisal, CMA and even photos of your neighbourhood.

QUICK STEPS TO APPEAL YOUR MPAC TAX ASSESMENT

  1. Compare your assessed value with similar properties in your neighbourhood to determine if it’s overvalued.
  2. Visit AboutMyProperty.ca to learn more about your property assessment.
  3. Request the Comparable Properties Report from MPAC.
  4. Request your home appraisal from your lender and request a report of similar properties that have recently sold from your real estate agent. (Call Chantal at 613-371-6024 for this free Market report)
  5. When filing your Request for Reconsideration, include compelling reasons and supporting documentation, such as recent home appraisals, sales information of comparable properties, photos, zoning information and estimates for significant repairs.

Some other features that may affect value include:

  • finished basements;
  • garages;
  • pools;
  • fireplaces;
  • number of bathrooms; and
  • the type of heating and air conditioning.

Site features can also increase or decrease the assessed value of your property, such as:

  • traffic patterns;
  • being situated on a corner lot; and
  • Proximity to a golf course, hydro corridor, railway, green space…etc.

The Request for Reconsideration must be filed by the owner, the person who has received the property assessment. There is no fee for filing a Request for Reconsideration (RfR) with MPAC. Filing an appeal can be time-consuming, but well worth it.
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Collateral vs Conventional mortgages

Hi, there was a piece on CBC’s Marketplace show recently about mortgages being registered as collateral vs conventional and I thought I would take a moment and explain the differences between those two types of registrations.

Collateral mortgages are becoming more common and it is important that clients understand the differences.  Collateral mortgages are typically registered for more than the actual mortgage requested (in some cases, up to 125% of the value of the home).  The terms of the mortgage are the same ie 5 year term, 25 year amortization for example.

The benefit of a collateral charge is that it can allow the client to refinance up to the amount of the registration without incurring legal fees (assuming that the client qualifies and that the property appraises).  There are two cons.  At renewal a client cannot switch if they do not like the rate so they are somewhat at the mercy of the lender in terms of getting the best rate deal.  Also, should a client have financial issues which will not allow them to qualify for a standard bank mortgage they may have trouble getting a second mortgage as not all lenders will go into second position behind a collateral charge.

As a mortgage agent it is not my job to pick one type of registration over another, it is my role to ensure that a client understands their mortgage options so that they can make an informed decision based on their current circumstances, taking into account what impact that decision may have on future choices.

As always, should you have any questions about this information please feel free to call or email me.

Cheers

Karen Lemieux

Accredited Mortgage Professional, CFP, BComm
Trust, Service, Accountability
Mortgage Agent
Mortgage Brokers Ottawa

788 Island Park Dr
Ottawa, Ontario
K1Y 0C2
Fax: 613-274-7389
Email: karenl@mortgagebrokersottawa.com

Apply Securely Online: www.karenlemieux.com

Broker license: 11759

” The highest compliment my clients give me is the referral of their family, friends and business associates. Thank you for your trust.”

Cell: 613-304-1500
Office: 613-798-1973

BMO to raise back up controversial Mortgage Rates

The Bank of Montreal will return the posted rate for a fixed five-year mortgage back to 3.09%, where it was before they lowered it to 2.99 per cent.  Financial Minister Jim Flaherty had expressed his disapproval over the lowered rate which was offered as of March 4th.

Manulife also reversed its decision to offer a lower rate last week after they received a call from Flaherty asking them to reconsider.

There are however lots of lenders still offering  5 year fixed mortgages below 3% at this time, if you are looking for a new mortgage or would like more information please feel free to give me a call and I can answer any questions you may have.

 

Attention Buyers – BMO Mortgage Rate Cut May Spark Price War

The Bank of Montreal recently cut its five-year fixed mortgage rate to 2.99 per cent as we head into the important spring housing market.  BMO is lowering the rate on its five-year fixed low-rate mortgage to 2.99 per cent from 3.09 per cent on a loan with an amortization period of 25 years.

Other banks have yet to follow suit on their posted rates but already buyers are reporting negotiating rates below 3% with other institutions.

This is not the first time BMO has made this move; last year it also lowered its rate for the spring market, but only for a short time.  When it made the move last year other banks were quick to introduce competitive products. It is unknown how long BMO’s current offer will be offered.

It’s subject to withdrawal. We’re not announcing how long it will be out in the market.

Sameh Elrefaei, BMO’s head of mortgage products

The lower rates are likely being offered to remain competitive in a shrinking housing market  after the government introduced tougher mortgage rules last year.

If you are thinking of renewing your mortgage or are interested in purchasing to take advantage of these low rates I would be happy to assist you.  Fill out the short form below today and I can arrange a free, no obligation consultation for any of your mortgage needs.

Get a Free Mortgage Consultation

 

1st Time Home Buyers Rebates

Home Buyers Plan – up to $25,000

If you currently have a registered retirement savings plan (RRSPs) you can withdraw funds from your plan to buy or build a home for yourself or for a related person with a disability.  For the home to qualify it must be located in Canada.  Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings – both resale and those newly constructed  all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in a housing unit located in Canada, also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

You can withdrawl funds from more than one RRSP as long as you are listed as the owner of each RRSP and the fund is not locked in or a group RRSP. Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the Home Buyers Plan, or they may not be deductible for any year. Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.

To qualify you need to be a first time homebuyer and a resident of Canada. If you or your spouse or common-law partner have previously owned a home, you may still be considered a first-time home buyer.  Also if you are building or buying a home for a person with a disability you may not have to meet this condition. To take advantage of the 1st Time Home Buyers Plan you need to enter into a written agreement to build or buy a qualifying home. Simply obtaining a pre-approved mortgage does not satisfy this condition. You also need to occupy the home within a year of building or buying, and it must be considered your principal place of residence.

The Home Buyers Plan allows you to withdraw up to $25,000 from your RRSP in a calendar year. To learn more visit http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

 

First-time Home Buyers Land Transfer Tax Refund – up to $2000

Land Transfer Tax is a tax applied to all transfers of land in the Province of Ontario. It may either be claimed at the time of registration – in which case your eligible amount is deducted from your tax payment or you can claim it later in which case you receive the refund directly from the Ministry of Finance.

All applications for a refund must be made within 18 months after the date of transfer. To qualify you need to be a 1st time homebuyer (your spouse also cannot of owned a home while being your spouse.) you must be at least 18 years of age and you must occupy the home as your principal place of residence within 9 months of the date of transfer.

If purchasing a newly built home where the Agreement of Purchase and Sale was entered in prior to December 14 2007 you need to be entitled to a Tarion New Home Warranty. The refund can be processed by your lawyers office, be sure to advise your lawyer prior to the closing date if you qualify for the rebate.  You may also receive the rebate  by completing the “Ontario Land Transfer Tax Refund Affidavit For First-time Purchasers of Eligible Homes

Rebate Examples
Cost Of Home
Tax Payable
Tax Rebate
$100,000
$725
$725
$200,000
$1,725
$1,725
$300,000
$2,975
$2,000

New Mortgage Rules Will Affect House Prices and First Time Homebuyers

 

As of July 9th the government will be enforcing new mortgage rules in an attempt to discourage people from taking on new loans that will be less affordable when interest rates rise.

The biggest change for home buyers is there will no longer be injured mortgages of longer than 25 years offered.  (Insured mortgages are provided for those who don’t have a down payment of 20 per cent or greater, currently 30 year injured mortgages are offered.)

This is a move to try and reduce the debt load of Canadians and to encourage us to pay off debt quicker.

Another change is the maximum amount of equity homeowners can take out of their homes when refinancing is being reduced to 80 per cent from 85 per cent.

There will also be a new rule to ensure a loan is not too large of a percentage of a household’s income.

Finally, insured mortgages will be available only for homes with a purchase price lower than $1-million – a measure to ensure taxpayers do not back mortgages for the wealthy.

The new rules apply only to new government-insured mortgages after July 9. Existing mortgages with longer amortizations can be renewed as usual. However, those who wish to increase their loan amount on renewal will have to amortize over 25 years.

Many experts agree that home prices are currently inflated, particularly in Toronto and Vancouver, and are due for a correction. But there is much disagreement about how much of a prod the market actually needed.

Phil Soper, CEO of Royal LePage, believes that the government, which had already tightened the rules three times since 2008, should have let the market correct itself at this point. He was quoted in the Globe and Mail as saying:

 I supported the previous moves but I’m disappointed with this particular set of changes.  The market is clearly cooling on a national basis, and I’m concerned that what is essentially a Toronto problem is being attacked with a blunt instrument that’s going to hurt the housing market nationwide.

Mr. Soper argued that many experts are too focused on house price growth, while signs of slower sales in the last month suggest that prices will fall on their own.

National house prices were actually down slightly (May to May) and these averages are being inflated by a few hot housing markets – Toronto and Vancouver.  House prices in Toronto rose by 8.5 per cent in April from a year earlier, a recent five-unit “fixer upper” semi-detached sold for $227,000 above asking price!

The moves are likely to have the greatest impact on first-time buyers looking for mid-priced homes. Economists say the changes are the equivalent of a 1-per-cent increase in interest rates.

 

More info: http://m.theglobeandmail.com/globe-investor/personal-finance/mortgages/tightened-lending-for-mortgages-will-cool-market-but-by-how-much/article4362005/?service=mobile