When attempting to figure out whether or not you can afford a home, it is normal for people to typically focus on their down payment and mortgage. These numbers account for a large percentage of homeownership costs. However, it’s far from everything. The truth is, paying down the full price of your new home isn’t all there is to being a homeowner. Depending on the property, you also need to take into consideration homeownership costs, such as condo fees, as well as insurance and maintenance fees. On top of this, you’ll have to pay property taxes. Luckily, isure has everything you need to know when it comes to what an MPAC (Municipal Property Assessment Corporation) assessment is, and how it relates to your property taxes.

What is the relationship between an MPAC assessment and property taxes?

Property taxes are a fee instated by the local government. It charges property owners based on what they consider the value of your property to be. Generally, this tax is a percentage of what your property is deemed to be worth. This tax is paid on an annual basis, and can change depending on the municipality.

If you live in Ontario, your property tax is determined from a property assessment by the Municipal Property Assessment Corporation, or MPAC for short. MPAC is a not-for-profit organization that works with the province of Ontario to assess all types or properties. From here, they report the value of the property to the municipality in which it belongs to. From there, the local government will use the numbers provided to determine what your property tax will be. This process is what is referred to as an MPAC assessment.

What does an MPAC assessment consist of? 

An MPAC assessment is the process that the organization uses to determine the value of your property. Once the value is determined, your local government will determine how much money you will be owing in property taxes that year. This happens every four years, with the last MPAC assessment taking place in 2020.

But how exactly does MPAC determine the value of your property? In order to come up with a value for the property, they analyze the sales of similar properties that have been sold in your area. Based on the sales information, they look at their five major factors that will end up accounting for your property’s assessed value. These are as follows:

1. Age of building on the property

The age of the house you will be purchasing will greatly affect the price of property taxes. The MPAC will not only take into consideration the year your house was built (known as “actual year”), but any renovations or additions that have been done since the house was built. Believe it or not, these may change the effect year your house was built.

2. Total square footage

MPAC will also take into consideration the total square footage of your home’s living area. This will include measuring the exterior of your home in order to figure out the total area inside the building. This will not include the basement, deck, porch or garage. If your home has more than two floors, MPAC will include the third and upper floors based on your home’s exterior and interior measurements where they are available.

3. Your property’s location

The neighbourhood and market area in which your home is located will affect what others will be willing to pay if you sold it. Many different neighbourhoods tend to reflect a combination of influences. People will choose to live in an area based on similar desirability. Additionally, MPAC takes into consideration the physical environment surrounding your home, such as schools, shops and public transit.

4. Size of your lot

The size of your lot plays a huge factor when it comes to the price of your property tax. The area of your lot is calculated by multiplying the frontage of your lot by the depth of the lot. The frontage is the portion of the lot that is directly beside the roadway, while the depth is determined by measuring the distance from the front boundary of the lot to the rear boundary.

5. Quality of construction

Last, but certainly not least, is the quality of construction in which your home is built. To determine this, MPAC takes into consideration the materials, architecture and the workmanship used to build your home. Different methodologies are used to identify certain levels of quality, since building standards and codes change frequently. You can view these qualities on the MPAC website here.

Will an MPAC assessment affect my home insurance rate?

This is a great question and one that is worth asking. The short answer is, no. MPAC property assessments do not affect your home insurance rate at all. The value in which your property is assessed does not affect the price you will be paying on your property’s insurance.

Remember, if an all-inclusive insurance policy at the best possible rate is what you are looking for, be sure to give isure a call. Contact us today or request a quote today!

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