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How to ensure your assessment is accurate to maximize your property tax savings

How to ensure your assessment is accurate to maximize your property tax savings

Synopsis
3 Minute Read

Property tax errors happen all the time, and many organizations may not realize how much they’re overpaying. MNP recently helped one client recover close to $1 million due to a flawed reassessment.

We recommend all organizations review their annual assessment notices, respond to requests from assessing bodies for more information, and seek outside advice if the assessment has changed to ensure their property tax liabilities are fair and reasonable

Senior Manager, Property Tax Recovery
Partner, Property Tax Services

As a commercial real estate owner, an unexpected increase in your property tax can have a significant impact on your finances. So, what can you do when your property is reassessed incorrectly — leaving you to pay much more than you did previously?

MNP’s Property Tax Services team recently helped a client appeal an inaccurate property tax reassessment for a 128-stall underground parkade in Toronto’s downtown core. The reassessment overvalued the property by 115 percent and would have made owning the parkade financially untenable.

Why did the property value change?

The property shared an entry with another residential parkade. The client previously contracted a consultant in 2012 who had missed an error by the Municipal Property Assessment Corporation (MPAC) that combined the number of stalls in both parkades when they should have been separated as different properties with their own roll numbers.

Additionally, based on its location, the underground parkade was also assessed as a redevelopment land with value attributed to the increased density on the site. However, as the property had already been redeveloped 10 years ago, and a residential complex had been built above it to maximize density, the density value had already been captured.

Further complications were encountered as the assessing body had postponed reassessments during the pandemic — which caused a significant delay in the resolution of the appeal.

How does the appeal process work?

MNP’s Property Tax Services team communicated with our client through each step of the appeal process. We provided evidence to MPAC that the residential and commercial parkades were separately titled properties owned by different bodies and, despite sharing an entrance, should be assessed as such.

We also demonstrated the value of the residential property built on top of the parkade and established that the units were owned by individual people (versus a single landlord) to show that the land was already at its best use and therefore, should not be assessed as redevelopment land.

Through our work with stakeholders, our adherence to best practices, and due diligence, MNP’s Property Tax Services team was able to demonstrate that the current assessed value did not consider the above factors and therefore, should be reduced to reflect the parkade’s true value.

What was the outcome of the appeal?

After MNP worked with MPAC, the final assessed value of the underground parkade was reduced by $20 million and resulted in tax savings of $950,000 for the client. The total reduction was 67 percent of the original assessed value; this meant it was now 30 percent lower than the 2012 assessment that was handled by the previous consultant.

What are the best practices for my property tax?

We encourage commercial real estate owners to follow these best practices to ensure your property tax has been assessed accurately and reflects the current value of your property:

Annual Assessment graphic

Check your annual assessment notice

Review your assessment notice when it arrives in January to confirm that the value or tax class of your property has not changed. 
If a change has occurred, contact an advisor to ensure the new assessment is accurate.

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Respond to requests for information

Assessing bodies, such as MPAC in Ontario, may reach out to you with requests for more information about your commercial real estate property. It is essential to respond to these requests to ensure your property value remains accurate and does not impact your property tax.

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Seek outside advice

Consider contacting a property tax advisor if you have questions about the assessment of your property. They can help you understand your assessment, ensure that your property has been assessed correctly, and work with you on a contingency basis to identify tax savings opportunities for your commercial real estate property.

Get the right advice

Contact an MNP Property Tax Services advisor for more information if you need help determining whether your commercial real estate property tax assessment is accurate. We can help you determine if your assessment reflects the current value of your property, identify and appeal errors in your assessment, and work with you on a contingency basis to identify tax savings opportunities for your commercial real estate property.

Giovanni Worsley
Partner, Property Tax Services
[email protected]

Robyn Ferguson, AMAA, M.I.M.A
Senior Manager, Property Tax Services
[email protected]

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