Property Tax in Ontario: How It Works for Homeowners

This article is general information, not tax advice. Property tax rates are set annually by municipalities and the province of Ontario. Confirm your property's assessment and tax obligations with MPAC and your municipality.

Property tax is one of the ongoing costs of owning a home in Ontario that first-time buyers often underestimate. Unlike the mortgage payment, property tax does not appear in the same place on every statement — it is billed separately by the municipality, varies significantly by city, and can change year to year. Understanding how it works helps you budget accurately and spot errors in your assessment.

How Ontario property tax is calculated

Your annual property tax bill is the product of two numbers:

Property tax = assessed value × tax rate (mill rate)

Both numbers are determined by different parties and updated on different schedules.

The assessed value: set by MPAC

The Municipal Property Assessment Corporation (MPAC) is an independent, non-profit corporation that assesses every property in Ontario. MPAC's assessed value is the estimate of your property's market value as of a specific reference date.

Historically, MPAC reassesses all Ontario properties every four years. The most recent province-wide reassessment used a January 1, 2016 reference date for values that have applied since 2017. Due to COVID-19 and economic uncertainty, the next province-wide reassessment was deferred several times; as of mid-2026, the Province of Ontario had not yet completed the next full reassessment.

This matters for two reasons:

1. Your MPAC assessed value may be significantly lower than your home's current market value — especially for properties in markets that have appreciated since 2016.
2. When a province-wide reassessment eventually occurs, many homeowners will see their assessments rise, which can increase property taxes even if the mill rate stays flat.

Phase-in of increases: When MPAC assessments increase, Ontario phases the increase into your tax bill over four years (25% of the increase per year) to reduce the impact of large sudden jumps. Decreases in assessed value are implemented immediately.

The tax rate: set by your municipality

Each Ontario municipality sets its own tax rate (expressed as a mill rate, where 1 mill = $1 of tax per $1,000 of assessed value) annually through its budget process. The total rate includes three components:

1. Municipal mill rate — set by the local city or township
2. Education tax rate — set by the provincial government (applies province-wide but at a standard residential rate)
3. In some areas, conservation authority levies or other small additions

Rates vary widely across Ontario. Municipalities with lower assessments relative to spending needs tend to have higher mill rates, while high-assessment cities like Toronto tend to have lower mill rates in percentage terms.

Range in practice: Effective property tax rates in Ontario typically run from roughly 0.5% of assessed value (parts of the GTA) to over 1.5% in smaller cities and rural municipalities. On a $700,000 assessed home:

• At 0.6%: approximately $4,200/year
• At 1.2%: approximately $8,400/year

The difference between a GTA suburb and a Northern Ontario municipality is real and material to your monthly budget.

How to look up your assessed value and tax rate

• Your assessed value: Visit mpac.ca and use the AboutMyProperty tool. Every Ontario property owner has access to their assessment notice and the comparable sales MPAC used.
• Your tax rate: Your municipality's website publishes its annual mill rates, usually alongside the budget. The City of Toronto publishes it as the "residential property tax rate"; other municipalities use similar language.
• Your current bill: Ontario municipalities send property tax bills twice a year (some quarterly). The bill shows assessed value, the applicable rates, and the total annual tax.

What first-time buyers need to know: the new build assessment gap

If you are buying a new build — a newly constructed condominium or house — be aware of the new build assessment gap:

When a new home is assessed for the first time, MPAC bases the assessment on construction completeness and the reference date. The initial assessment is often lower than the home's full market value because MPAC may assess it before all improvements are recorded or before the property is at full value. This initial assessed value produces a lower first-year tax bill.

However, MPAC will reassess the property (usually at the next annual update) once the full construction and sale are reflected. When the reassessment comes through, the assessed value — and therefore the tax bill — can jump significantly, sometimes by 50–100% of the initial assessment. The first-year tax bill shown in a developer's information package or in the prior year's municipal records is often not the amount you will pay once fully assessed.

What to do: Ask your lawyer or the municipality what the prior assessed value was, check MPAC for the current notice, and budget a buffer if you are buying a new or recently completed home. Many first-time buyers in newer condominiums discover their property tax is significantly higher after the first full reassessment.

The property tax and mortgage payment math

Lenders often include property tax in their GDS (Gross Debt Service) ratio calculations — the tax is part of your "housing costs" for qualification purposes. However, some lenders use the current assessed value's tax rather than the future reassessed tax, which can produce a GDS calculation that underestimates true costs.

The mortgage affordability calculator accounts for property taxes as a user input — enter the realistic annual property tax, not just the current year's lower bill.

Property tax and the principal residence exemption

Property taxes paid on your principal residence are not deductible for individual homeowners — there is no personal income tax deduction for property taxes on a home you live in. (For rental properties, property taxes are deductible against rental income.)

For most homeowners, property tax is simply a cost of ownership. It does not affect your principal residence exemption on sale. See Principal Residence Exemption Canada: How It Works.

Property tax and refinancing or selling

When you sell your home, property taxes are prorated between buyer and seller at closing. The seller owes the portion for the days they owned the home in the current year; the buyer owes the rest. This adjustment is handled by your lawyer and will appear on the statement of adjustments at closing. If the seller has prepaid the full year, you will reimburse them; if they have paid nothing, they will credit you.

Can you dispute your MPAC assessment?

Yes. If you believe your MPAC assessed value is incorrect, you can file a Request for Reconsideration (RfR) through MPAC, at no cost. If you are not satisfied with MPAC's response, you can appeal to the Assessment Review Board (ARB). Grounds for appeal typically include errors in property data (wrong lot size, number of bedrooms, year built) or evidence that comparable sales support a different value. Most successful appeals result from documented factual errors, not general market disagreement.

The deadline to file a Request for Reconsideration is typically March 31 of the tax year in question, and the deadline for an ARB appeal is usually shortly after. Check current deadlines at mpac.ca.

Frequently asked questions

How is Ontario property tax calculated?

MPAC sets your assessed value; your municipality sets the mill rate. Your annual tax bill is the assessed value multiplied by the total mill rate (municipal + education + any other levies). The effective rate varies by municipality from roughly 0.5% to 1.5%+ of assessed value.

When is Ontario property tax due?

Most Ontario municipalities send two bills per year — one in early spring (covering the first half of the year) and one in the fall (covering the second half). Some send quarterly bills. Due dates vary by municipality; check your local city's website.

Can my property tax change year to year?

Yes. Your tax can change if MPAC updates your assessment (due to a reassessment, a sale, or a correction) or if your municipality changes its mill rate (which happens every year through the budget process). In a province-wide reassessment year, assessed values change for all properties.

Do new home buyers pay higher property taxes eventually?

Often yes. Initial MPAC assessments on new builds can be lower than the ultimate fully-assessed value. After MPAC completes the assessment at full construction value, the tax bill typically increases. First-time buyers of new builds should budget for this adjustment.

Is property tax deductible in Canada?

Not for your personal home. Property taxes on a principal residence are not deductible on your personal income tax return. For rental properties, property taxes are deductible against rental income on Form T776.