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Question about MPAC assessments

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  • Feb 1st, 2023 5:36 pm
[OP]
Newbie
Dec 23, 2022
4 posts
3 upvotes

Question about MPAC assessments

Hi,

I have a question about MPAC assessments for property taxes. Let's say you have an aging secondary residence, and you want to fix it up. You go ahead and frame, insulate, and drywall your completely unfinished basement and also put in an insulated subfloor and nice hardwood flooring, put in some nice new lights, maybe even replace the old single pane windows with new double pane windows, and who knows maybe even add in a washroom too. The value of your residence has likely increased, but because you didn't pull a building permit, MPAC has no idea that the work has been done and that the value of the residence in question has increased.

In this scenario, are you legally obligated to report the renovations to MPAC or is there no legal requirement? Would it be considered fraud or tax evasion if you do not report the renovations to MPAC, or is it fine because they do outdoor visual inspections from time to time and possibly show up at your door for in-home inspections? I'm kind of wondering what the requirements and obligations in a situation like this would be.

Cheers.
20 replies
Sr. Member
Oct 30, 2017
653 posts
511 upvotes
Toronto
I doubt that anyone self-reports such renovations to MPAC. However I will let "pros" answer this one.
Deal Fanatic
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Oct 13, 2008
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Why the hell would you report your upgrades?

You'll end up complaining about paying HIGH property taxes due to your own stupidity.

Nobody wants to pay more taxes except fools.
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Deal Addict
Nov 16, 2011
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it is fairly common in Ontario for building permit information to be shared with MPAC which in turn will re-appraise your home.
[OP]
Newbie
Dec 23, 2022
4 posts
3 upvotes
jdmfishingonly wrote: Why the hell would you report your upgrades?

You'll end up complaining about paying HIGH property taxes due to your own stupidity.

Nobody wants to pay more taxes except fools.
Of course, it's not like you'd want to report your upgrades to MPAC. It'd only be a good idea to report your upgrades to MPAC if it's considered tax evasion/fraud if you don't. If there's no legal requirement to report your upgrades to MPAC, then of course you wouldn't do so. I was just wondering if it's required by law to report your upgrades to MPAC.
luckystrike1 wrote: it is fairly common in Ontario for building permit information to be shared with MPAC which in turn will re-appraise your home.
Sure, but in this scenario there would have been no building permit pulled, so MPAC wouldn't have known unless they were explicitly told by the home owners.
Deal Fanatic
Jun 24, 2015
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MPAC cares more about the property aka the land rather than what is done inside the house. remember property taxes are not just based on your house, its also based on your land too. do u have a pool, do you have a pergola, a shed, a cement patio, a deck, a outhouse, a structure outside? those are more important to mpac than the colour of tiles in your new basement shower you and your brother in law built with out a permit
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ipkrfd wrote: Of course, it's not like you'd want to report your upgrades to MPAC. It'd only be a good idea to report your upgrades to MPAC if it's considered tax evasion/fraud if you don't. If there's no legal requirement to report your upgrades to MPAC, then of course you wouldn't do so. I was just wondering if it's required by law to report your upgrades to MPAC.


Sure, but in this scenario there would have been no building permit pulled, so MPAC wouldn't have known unless they were explicitly told by the home owners.
Reporting upgrades is just dumb. There is no law to report any upgrades unless you require permits for the job.

For us ... we changed out all the countertops in kitchen & washrooms (to quartz w a waterfall kitchen island) ... added backsplash (to full pane quartz) ... installed hardwood flooring & quartz fireplace mantle ... widened front stairs and porch (to exposed aggregate concrete) ... swapped out windows/doors ... changed roof shingles ... new A/Cnone require permits ...

ultimately ... increased value of property without the need to let MPAC know ...
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[OP]
Newbie
Dec 23, 2022
4 posts
3 upvotes
jdmfishingonly wrote: Reporting upgrades is just dumb. There is no law to report any upgrades unless you require permits for the job.

For us ... we changed out all the countertops in kitchen & washrooms (to quartz w a waterfall kitchen island) ... added backsplash (to full pane quartz) ... installed hardwood flooring & quartz fireplace mantle ... widened front stairs and porch (to exposed aggregate concrete) ... swapped out windows/doors ... changed roof shingles ... new A/Cnone require permits ...

ultimately ... increased value of property without the need to let MPAC know ...
I would say that putting in a bathroom in an otherwise unfinished basement would probably require a permit, I suppose some people do it without a permit though. Although there might not be a "law" to report those upgrades to MPAC, since in theory the building permit would automatically take care of that essentially so there'd be no need for a "law" to explicitly self-report any upgrades to MPAC.

I guess this is kind of grey area, but like was said, they might not care too much about the inside of the house versus the outside especially when adding external structures and they might not care about the added value from a brother in law building a shower in a basement without a permit.

It's an interesting thing to think about, and if it were required by law to report upgrades to MPAC I'm sure people here would mention so.
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Oct 13, 2008
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ipkrfd wrote: I would say that putting in a bathroom in an otherwise unfinished basement would probably require a permit, I suppose some people do it without a permit though. Although there might not be a "law" to report those upgrades to MPAC, since in theory the building permit would automatically take care of that essentially so there'd be no need for a "law" to explicitly self-report any upgrades to MPAC.

I guess this is kind of grey area, but like was said, they might not care too much about the inside of the house versus the outside especially when adding external structures and they might not care about the added value from a brother in law building a shower in a basement without a permit.

It's an interesting thing to think about, and if it were required by law to report upgrades to MPAC I'm sure people here would mention so.
Since newbie has so many questions ... there is a way to find out. Google. Or call the government. Simple.
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[OP]
Newbie
Dec 23, 2022
4 posts
3 upvotes
jdmfishingonly wrote: Since newbie has so many questions ... there is a way to find out. Google. Or call the government. Simple.
Well I did Google and didn't really find anything so I made this thread so others in the future could find the answers when Googling the same thing, but yeah fair enough that's true.
Deal Guru
Jan 25, 2007
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Paris
MPAC doesn’t care much about specifics. They care about the value of the homes in your neighbourhood. If, in general, your neighbours have unfinished basements and you don’t, you are already paying for the value of a house with a finished basement.

I argued with MPAC on a raise once as they valued my house like homes in my neighbourhood that had recently sold that had a 4th bedroom above the garage, which mine did not. I finally had to send them pictures of my non-existent room over my garage.
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Jun 24, 2015
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Jerico is right!
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Member
Nov 30, 2015
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GTA, ON
Jerico wrote: MPAC doesn’t care much about specifics. They care about the value of the homes in your neighbourhood. If, in general, your neighbours have unfinished basements and you don’t, you are already paying for the value of a house with a finished basement.

I argued with MPAC on a raise once as they valued my house like homes in my neighbourhood that had recently sold that had a 4th bedroom above the garage, which mine did not. I finally had to send them pictures of my non-existent room over my garage.
Correct. It's called "Market Value Assessment". They put the onus on the homeowner to prove that the value assessed should be lower than your neighbours.
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Jun 24, 2015
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MPAC also does not care if the prior owner of your house did some renovations and did not pull a permit.
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Newbie
Jan 26, 2023
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Hi, when you say that MPAC does not care if the prior owner did some renovations and did not pull a permit, do you mean they still require you to report changes or inaccuracies with the details of the assessment ?

In my case, I just discovered that our unfinished basement is assessed as a finished basement and that our regular lot is rated as a corner lot.

I am not sure if I should ask for this information to be corrected because, although I am paying10 percent more than my neighbour in a similar home that has a finished basement, the assessed value of my home is half of what the current market value is. Or is everything based on the values in 2016 ?

Thank you
Deal Addict
Nov 17, 2012
4740 posts
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Toronto
Nobody is going to come after you for fraud for theoretically underpaying on your property taxes for un-declared improvements to your home.

Not every improvement requires a permit. New flooring, paint, trim improvements, new light fixtures, appliances, landscaping...

The assessed value of 99% of homes have nothing to do with any permits pulled. Most homes don't have any recent renovations done with or without permits. Many $2M homes in Toronto haven't been updated since 1960 for example, yet their assessed value continues to increase.

Now - if you're overpaying property taxes and the details on About My Property show things that are simply not true, then 100% file for a reassessment.

When I bought my cottage in 2013, I received the 2012 MPAC assessment as part of the property transfer. It was then I realized they had increased the value of the property by 40% from 2008 to 2012 for no reason - no improvements, no additions - nothing since the place was built in 1992. The assessed value was 30% more than I paid for it.

I did some market research and challenged the assessment and got it back down to the purchase price of the property, which thankfully was quite low. Then in 2015 I pulled a permit and had an addition put on and MPAC increased the assessed value, interestingly by exactly the value of the building permit.

Thankfully the builder I hired was only for the rough framing and roofing work. I did all the windows/interior work myself and paid another contractor to do the siding work without a permit (I don't think you need one for siding).

So - the $18K contract for the additions became the increase in value to my property, but didn't include the $5,000 worth of windows or $15,000 in siding I had put on the entire cottage.

Lesson learned - be strategic with the value of the permits you pull. I recently did another for an accessory building and I did all the drawings/permit application myself. The value is based on the raw materials I expect to use to build the building myself - I'm not counting any paid labour I might pull in to help build it and I expect MPAC will add only the permit value to my property once I close it out, if I get around to building it.
Deal Guru
Jan 25, 2007
12159 posts
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Paris
jdmfishingonly wrote: ultimately ... increased value of property without the need to let MPAC know ...
Ultimately if the majority of your neighbours do these Reno’s and sell, then MPAC assumes you have as well.

MPAC assumed I suddenly had a room over my garage as we are the second last on our street of the 2002 building cycle and the 2005 building cycle all had these rooms. A few houses sold and suddenly they upped our value based on those “comparables”. They added a room to our house to make it a 5 bedroom too. That was an interesting fight.
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May 13, 2007
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Lake of the Woods, N…
torontotim wrote:
Lesson learned - be strategic with the value of the permits you pull. I recently did another for an accessory building and I did all the drawings/permit application myself. The value is based on the raw materials I expect to use to build the building myself - I'm not counting any paid labour I might pull in to help build it and I expect MPAC will add only the permit value to my property once I close it out, if I get around to building it.
Please review your ascertions.

From the Building Permit Fees (TO)

Permit fees shall be calculated based on the formula given below unless otherwise specified in this schedule:

Minimum fee of $198.59 (2023) shall be charged for all work.

An hourly fee $85.79 (2023) shall be charged for examination and inspection activities.

Fee Calculation Formula:

Permit fee = SI x A
SI = Service Index for classification of proposed work
A = Floor area in m2 of work involved of work involved

There is a "Interpretation of Fee Calculation" further into the linked document above.
Searching the SI part above led me to this doc

Chapter 363 - City of Toronto
https://www.toronto.ca › legdocs › municode
PDF
Feb 3, 2021 — SI = Service Index classification of the work proposed. The Service Index is the fee set out in Chapter 441, Fees and Charges. A = Floor area in ...
75 pages

looking at Chapter 441, Fees and Charges, one can review the SI applicable to their situation.
The cost is not materials + labour as I see it from these docs.

I tried applying a value on my project 10 years ago with material only as I would be doing all the work to completion. There was no way. The permit was issued by using a common average of 50% to each. Even this little hick town knew better, yet there was no requirement for demolition activity.
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Oct 13, 2008
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Steve44 wrote: Hi, when you say that MPAC does not care if the prior owner did some renovations and did not pull a permit, do you mean they still require you to report changes or inaccuracies with the details of the assessment ?

In my case, I just discovered that our unfinished basement is assessed as a finished basement and that our regular lot is rated as a corner lot.

I am not sure if I should ask for this information to be corrected because, although I am paying10 percent more than my neighbour in a similar home that has a finished basement, the assessed value of my home is half of what the current market value is. Or is everything based on the values in 2016 ?

Thank you
All MPAC values are years behind .... they have a schedule that they do assessments ... the lower the MPAC they less taxes you pay. If they decide to reassess your area (they can at any time WITHOUT notifying you), then you will end up paying more taxes.

There is absolutely NO NEED to correct information ... unless you have have tons of money to toss at the government.
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