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Now our property taxes still not so crazy, but when I saw new property evaluation done in December 2015 (Toronto), made me really upset. Only in 4 years based on prices that we have now in Toronto everybody will be paying double that paying now. And of course, landlords hike the rents as well. I just wondering how people who will retired planning to pay that crazy property taxes. I am not taking about luxury houses, but about old bungalows.
Just to make it clear I show it in numbers, approximately $500k house had taxes of $400 per month. But now, when prices went above million it will be over $1000 per month. Not sure if people can really afford it. Or we expect double salary increase in 4 years as well?;)
How the new assessment affects your property taxes depends on how the average assessment changes.
Your municipality does not decide to tax all properties at 1.5% (or whatever your mil rate is). They decide how much money they need, divide that amount by the total of all assessments to determine a rate. If everyone's assessment doubled, by this definition, their taxes would not change by one dime.
Having said that, the municipality may very well take advantage of the fact that assessments increased, and simply increase the total amount of money that they want from property taxes and try the defence of "we even lowered the mil rate" (or kept it the same).
Bottom line, in absence of the municipality demanding more money, if your assessment increases more than the average in your area, you pay more taxes. If it increases the same, you pay the same taxes.
Sorry I didn't quite understand what you have said. :) not enough knowledge in the field.Quote:
Originally Posted by brunt
I googled city of Toronto property website,
http://www1.toronto.ca/wps/portal/co...0071d60f89RCRD
And there is example there - we paying based on how much our property evaluated. It will be increasing proportionally year by year to reach maximum in 4 years, I don't see any "not increase" at all. I hope I am wrong.
What I am saying is that an increase in your assessment does not necessarily equal an increase in your property taxes.Quote:
Originally Posted by pskov
I'll illustrate with an example.
Assume that you live in a municipality with exactly 1,000 houses in it. Every single house is assessed at exactly $250,000. The municipality crunches their numbers and decides that they need exactly $1,000,000 as their budget requirement.
The way property taxes work is this:
The municipality divides the amount of money that they need by the total assessed value of all of the properties, and multiplies this number by 1,000 to give the mil rate - that is, the amount of money that you pay per thousand dollars of your house value.
Case A: Original Assessments
In this case, we have $1,000,000 budget requirement / (1,000 houses * $250,000 / house) * 1,000 = 4.0.
In other words, the municipality's mil rate is 4.0. This means that everyone would pay $4 per $1,000 assessed value of their house, or in this case $1,000.
Case B: Everybody's Assessment Doubles
Now assume that everyone's assessment exactly doubled to $500,000. Now, the mil rate will be computed as follows:
$1,000,000 budget requirement / (1,000 houses * $500,000 / house) * 1,000 = 2.0.
Now you will owe $2 per $1,000 assessed value, or exactly $1,000 still - even though your assessment increased.
Case C: Only Your Assessment Doubles
Now your assessment is $500,000 and everybody else has an assessment of $250,000. The new mil rate will now be computed thusly:
$1,000,000 budget requirement / (999 houses * $250,000 + 1 house * $500,000) * 1,000 = 3.996.
You will to pay $1998.00 (3.996 * 500), while everyone else will have to pay $999.00.
So you see, if you and everybody else has their assessment increase by the same amount, it does not directly change the amount of taxes that you have to pay. However, if yours increases by more than others, then your taxes will increase.
Now of course as I alluded to previously, the municipality can, and likely will, increase their budgetary requirement. This will make your taxes increase entirely independent of your assessment.
The city is addicted to property taxes. The Toronto cops budget is more than $ 1 Billion ! Not a single cop make less than $ 100,000. None of them have respect for tax payer's money.Quote:
Originally Posted by pskov
Lot of other over paid & lazy city executives and bureaucrats, who have jobs for life and can't be touched due to iron clad agreements with UNIONS, who protect them like crazy, no matter what. Amazing pensions , salaries and benefits too.
So the poor citizens have to suffer and pay property taxes like crazy, to support this red tape & bureaucratic machine. Lots & lots of wastage in the city.
The city will collect " X " amount of money no matter what. If the price of the house goes down, they will increase the property tax rate through some stupid legislation.
So either they will charge 1 % Property tax on $ 1 Million or if the RE market crashes and the same house becomes $ 700,000, they will charge 1.5 % on $ 700,000 . In the yearly budget meeting they will increase the property taxes % , water taxes, swimming fees, parking fees, TTC rates, make cuts to services etc etc if they find they are not taking in enough from Property taxes.
Lot of people in Toronto & Vancouver are house rich and cash poor. Especially the senior citizens living on fixed pensions and salaries ! Hydro rates have also doubled and tripled in last 10 years or so ! In addition to the property taxes due to increase in house prices.Quote:
Originally Posted by pskov
On paper they have million dollar houses, but they are actually living pay cheque to pay cheque with NO savings.
I think "brunt" did a great job explaining things.
I would just add that if housing values should drop property taxes would not necessarily drop. The city still needs $x to operate. It's all a "fair" way of distributing the cost.
Yes the city will collect a fixed amount no matter what. If the house values go down by 10 % , they will increase the property rate % by 10 % !Quote:
Originally Posted by Cake
They will charge either 1 % PT on a $ 1 Million house , and if Real Estate crashes big time and houses become $ 500,000 they will charge 2 % PT on $ 500,000.
That's what they did with Hydro rates. People started conserving hydro so they were getting less money, so they just increased rates for hydro ! The more you conserve and try to save, the more they increase the rates and your bill remains the same !
Same for Water rates ! Natural gas heating is the only thing that you seem to be paying less. But Hydro, Water, Property tax you seem to pay more and more, no matter what you do :(