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Thursday, July 22, 2010

Retroactive property tax bills

New homeowners in Etobicoke are being struck by multiple retroactive property tax bills for 2008, 2009 and 2010... and they have to be paid in two installments in September and October.

Depending on the size of a home in Etobicoke homeowners can expect the combined three tax bills to total between $2,100 for a small bungalow and $60,000 for a multi-million-dollar mansion.

Having to find such large amounts in a short time period has angered many homeowners, especially since this isn't the fault of the homeowners in the first place. This is the fault of lazy, slow-moving bureaucracy.

Property taxes in Ontario are assessed by MPAC (Municipal Property Assessment Corporation) and are usually assessed in the current year and going back up to two years. Thus the longest any property tax can be retroactive is three years. When that happens, homeowners get an extra hefty bill to pay in a short amount of time. But it is supposed to be extremely rare!

Normally assessment is supposed to happen within the first 6 months of new construction.

What has happened here is because of a shortage of inspectors and rampant growth of new homes in the Etobicoke region there has become a huge backlog of new homes that don't get assessed for 2 or 3 years after being built. (Or rebuilt in the case of fire or there was something wrong with the foundation forcing the house to be torn down and rebuilt.)

This year however instead of 1 or 2 homes being charged retroactive tax bills going back three years, there are literally hundreds of new homeowners who are getting whacked over the head by the tax truncheon. MPAC is refusing to give exact numbers, but the number of complaints continue to pile up.

Worse, if your house was rebuilt and it was originally valued at say $450,000 in 2007 and the new house is only worth $250,000 you still have to pay retroactive taxes on the house as if it was still worth $450,000.

More than 12,300 supplementary tax bills were mailed in the last cycle of land taxes in Etobicoke, mostly representing back land taxes for 2 years. There are 3 to 4 cycles of land taxes per year.

So yeah. That has just scared me away from buying a home in Etobicoke. If they can't send tax bills out on time, just imagine what else is wrong with the system out there.

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