What Are Property Taxes And What Are You Paying For?

Fivewalls: What Are Property Taxes In Toronto & What Are You Paying For?

Market News, Sellers, Buyers
Last Updated: Jan 14, 2021

Property taxes are what pays for everything going on in your city. The government generates money for public purposes through issuing homeowner’s property taxes. 

How Often Are Property Taxes Paid?

Once a year you will get a bill that can be paid in two installments. If you are paying your mortgage monthly, your total will include property tax and home insurance, a portion of which goes into an escrow account. Come property tax time, you will not get a separate bill unless your mortgage is paid off.

Renters also pay property taxes, but through their rental price to their landlords. 

As a renter, you will not receive a separate property tax bill either.

How is the amount determined? 

[ your current property value * general municipal tax rate * education tax rate ]

Your property value will be reassessed every 4 years. Your location, lot dimensions/type, an age of your home and many other factors are looked at to determine the value.

General municipal tax rate is established by your municipality. They will need to determine how much they need for services in the area.

Education tax rate is set by the provincial government to fund the elementary and secondary schools.

Why Do We Have To Pay Property Taxes In Toronto?

In 2018, Toronto’s budget was $11.12 billion, with an increase of 2.1% than the previous year. That is paying for public services such as:

  • Police Department (receive the highest percentage)
  • Fire Department
  • Paramedics
  • Social services
  • Construction 
  • Transit
  • Parks
  • Trails
  • Recreation
  • Libraries
  • Museums
  • City programs

Other services include:

  • Mayor/Council (receive the lowest percentage)
  • Administrative services
  • Financing/Infrastructure

The amount of tax you are paying will increase the more income levels do, as well as Toronto having a specific budget to build high rises, recreation centers, etc. 

Which Cities Have Lower Property Tax?

In 2018, Toronto was actually on the top of the list for paying the least property taxes in the GTA, even though house prices are higher.

Markham, Milton and Vaughan were close behind. 

Orangeville, Whitby and Oshawa were on the top of the list for paying the most in property taxes. 

What Happens If We Do Not Pay Property Taxes On Time?

Late payment charges will be added past your bill’s due date. If you still do not pay your bill, a penalty fee will be charged on top of your late payment charges. Not paying these charges can result in having an outstanding amount and will be higher than your initial tax bill total. 

The government can put a tax lien on your property and sell it to investors, who in turn collect your penalty and interest charges. If they do not sell it to investors and you are still not paying your bills, they will foreclose your home.

Did you know?

In Canada, Hamilton had the highest property tax rates in 2018. On an average priced home, people would be paying (roughly) around $6,900+. In Toronto, homeowners would be paying around $4,900+, despite people believing it is the most expensive.  

Last year, Orangeville had the highest ranked property tax rate in the GTA, with homeowners paying $7,900+ on an average priced home. Even with Oshawa being the most affordable city in the GTA, homeowners were paying $7,200+ in property taxes.