The Ontario deadline to file assessment appeals under the Assessment Act, R.S.O. 1990, c. A.31. has been extended to May 29, 2020. You might be asking: Why should I care? That question is answered below.
We all know that property taxes are one of the larger line items on the expense side of the balance sheet. Given the current and future impact of Covid-19 on our markets, now more than ever it is important to make sure that property owners take steps to ensure that they are paying their fair share of property taxes. In Ontario, property taxes are based on assessed value, defined as the “current value” in the Assessment Act.
“Current value” means “in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer”. The assessment methodology applied to determine current value depends on the property in question and the inputs into the given methodology. What all property owners or managers should question now is whether or not those inputs are correct and complete. In this regard, some of the questions to ask include, but are not limited to, the following:
- Is the property area correct?
- Is the gross floor area correct?
- Is the property class correct?
- For industrial properties, has the machinery and equipment been excluded from the value?
- For properties with environmental contamination, is remediation required? Are there different technologies or processes to achieve this? What are the relative costs of each solution? Have the appropriate costs to cure been applied as a downward deduction to value?
- Is the successful business being assessed and taxed in addition to the assessable items ?
- Has the appropriate level of functional and/or economic obsolescence been applied?
- For properties assessed based on highest and best use, has the cost to ready the site for development been appropriately applied?
Further, and perhaps most importantly given the present emergency, no one knows what tax rates will be after the Covid-19 pandemic and what may happen from a municipal finance perspective. Also, we will not know the full economic impact of the present emergency for some time. The filing of a protective assessment appeal should be considered as a prudent business measure.
You have until May 29, 2020, to file your assessment appeal with the Assessment Review Board. If you own or manage property and you are not sure if the inputs are correct, or if all inputs have been considered, or if you simply wish to file a protective assessment appeal while you review and analyze, we can assist you in this regard. Our real estate and environmental lawyers have the experience and expertise to guide you through the process.