Understanding property taxes is essential for budgeting, whether you own a home or are considering buying one. Even if you’ve reached a mortgage-free status, you’ll always have to account for them in your finances.
Municipalities decide on their property tax rates yearly, which can change depending on their budgets. These taxes are calculated by multiplying the city’s residential tax rate by the assessed value of your home, which is decided by the Municipal Property Assessment Corporation (MPAC).
Then, these property taxes are collected to fund essential local services such as police and fire departments, schools, road maintenance, garbage collection, snow removal, and sewage upkeep.
It’s also important to note that cities with higher house prices and more people, like Toronto, often have lower property tax rates because more people contribute to the budget. Also, businesses usually pay at least twice the tax rate compared to homeowners. This can explain why people living in regions with a smaller population might have to pay more property taxes than those in bigger cities.
Zoocasa compiled and ranked the 2024 residential property tax rates for 30 cities across the GTA, using data sourced from each municipality’s website and average year-to-date home prices from the June 2024 Toronto Regional Real Estate Board (TRREB) report.
For more property tax information, see Zoocasa’s report on Where to Find Canada’s Most Affordable National Taxes in 2024
What is Property Tax?
While each province and municipality has its own tax formula nuances, an individual’s property tax is generally based on the following:
- The overall assessed value of your home, as determined by the Municipal Property Assessment Corporation (MPAC). This takes into account recent comparable home prices in your neighbourhood, as well as your home’s specific features. For example, whether a home has received renovation updates, has a pool or basement, or a larger lot size, will all be factored into its assessed value.
- The Education Tax Rate, implemented by the province of Ontario, the proceeds of which are used to fund regional schools.
- The Residential Tax Rate, which is determined annually by a municipality’s city council, based on how much funding must be raised to meet their budget requirements.
Mississauga Leads the Pack for Tax Rate Hikes
Mississauga experienced a property tax rate increase of 7.39%, the highest among the analyzed cities. This substantial increase could significantly impact homeowners’ financial planning. In Toronto the tax rate increased by 7.36%, making it the second-largest increase, followed closely by Scugog with 6.78%.
Even with these jumps, it’s essential to take into account that Mississauga is still not the city with the highest property taxes in the GTA. On a home assessed at $750,000, a Mississauga homeowner can expect to pay $7,100 in property taxes.
Furthermore, its property taxes are not as high as those of homeowners within cities like Pickering ($9,179) and Whitby ($9,472). This will add to the financial burden of homeowners in these cities, as home prices are hovering around the million-dollar mark.
High Prices, Low Rates: Tax Stability in the GTA
Oakville has high average home prices, around $1.5 million, and a moderate tax rate of 0.795819%. Similarly, Vaughan ($1,215,869), Markham ($1,325,365), and Richmond Hill ($1,428,321) also have high average home prices but benefit from relatively low property tax rates. Although property taxes are not dependent on the cost of a home, the amount a homeowner pays per year is typically higher for larger homes. For example, property taxes for a home in Markham assessed at $750,000 is $5,103, $5,354 in Vaughan, and $5,364 in Richmond Hill.
Overall, Oakville and Vaughan experienced less than a 2.69% year-over-year increase offering a degree of year-over-year stability that may appeal to potential homeowners.
Comparing Property Tax Rates in the GTA
Markham has the lowest property tax rate among all cities analyzed. A home assessed at $1,000,000 incurs property taxes of $6,805, while a home assessed at $750,000 home will have a tax bill of $5,103.
In Orangeville, where the average home price is $827,067, the property tax for a home assessed at $750,000 home is notably higher at $10,842. This means an Orangeville homeowner pays 112% more in property taxes than a Markham homeowner with a home assessed at $750,000.
For a home assessed at $1M, a Markham homeowner pays $6,805 in property taxes, while an Orangeville homeowner pays 72% more, totaling $11,693.
Meanwhile, in Oshawa, a home assessed at $750,000 incurs $10,738 in property taxes, which is 58% more than a Markham homeowner with a $750,000 home.
Overall, these examples highlight the importance of considering property tax rates when purchasing a home, as they can significantly impact the overall cost of homeownership in the GTA.
Understanding these variations can help homeowners and potential buyers make more informed financial decisions. For instance, they might spend less on a mortgage payment by buying a home in Orangeville rather than a city with higher home prices like Markham while also saving funds throughout the year to pay property taxes accordingly.
Property taxes are a significant financial consideration for all homeowners. Consulting with a real estate agent can help you determine the type of home and lifestyle factors you’re seeking for your next move. Give us a call today.
This article was updated on July 29, 2024, to clarify that property taxes are based on assessed values, not home prices.
