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Property tax reconsideration

theflyingsquirrel

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I just purchased a commercial property and am having negative cash flow even without mortgage.
I will have to have the property tax lowered with the income method.
I came across The Canadian Justice Review Board from the internet.
http://www.canadianjusticereviewboard.ca/home.htm
Did anyone has experience with this? Are they scam?

Also, did anyone have any experience with reconsideration with MPAC?
Are they a total waste of time? Should I go for the Assessment Review Board (ARB) right away?
 

interested

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I have had experience with MPAC but on residential. I have been successful 1/2 the time. Just be ready with proper information. they quote the area if it is higher than you and your street if it is lower, in other words, they don't care about fairness, just about making an argument for the highest tax. However, if you can demonstrate that the commercial property is overvalued, and have comparables ready, MPAC will often either send out someone to value the property(which they did one time on me) or offer a compromise which may/may not be acceptable. I have not had to go to ARB but if you near the deadline, it may be worthwhile to put in the request just in case.
I have contested the one commercial property I had but used an individual who contests MPAC on behalf of clients who keeps 1/2 of what you get back in tax but the advantage is they deal with the hassle. You don't pay (other than the registration fee with MPAC to protest if they do not succeed.
hope this helps.
 

rbt

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I have had experience with MPAC but on residential. I have been successful 1/2 the time. Just be ready with proper information. they quote the area if it is higher than you and your street if it is lower, in other words, they don't care about fairness, just about making an argument for the highest tax.
Your assessment doesn't change the amount of tax revenue for the municipality (mill rate is adjusted based on assessments) or province (LTT is based on actual sale price). If MPAC is uncooperative, it is for reasons other than tax revenue.
 

interested

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Actually, I am not sure I agree RBT. while MPAC does not set the mill rate; the amount an individual pays is based on the assessment. So, if my assessment is lower, I will pay less personally than others in the municipality. In my experience, MPAC tries to set valuations but their methods are very crude. For example, if you are in a subdivision, they base it say on the street you are on. If someone happened to sell a fully loaded upgraded home, MPAC looks at that and assumes all sales if that was the only one for the year will reflect this when in fact it may grossly over/underestimate true value of another home on the street. I believe they try and justify themselves and of course taxpayers try to lower their personal rates. Once you get your assessment, if you can lower it by 10%, the municipality either has to up the mill rate by a small fraction of a percent to make up for you or they end up with somewhat less revenue. MPAC tries to do a job for the province but as I said a lot of their work is simply not reflective of market value.

The reason I referred to them not caring about fairness is as follows. I have a property on a ravine which I appealed the assessment on. The house next to me was not on the ravine and they forgot to assess it the ravine premium of about $50,000 that they added to my and the other 18 houses on the street. I was appealing because since my house was a rental, it was not as upgraded as others on the street being used by end users. Even though I could show pictures of the other houses (listed or sold being upgraded and mine the same model not) MPAC at appeal did not accept my arguments. But because they forgot to include the ravine premium on the house next door, the adjudicator concluded that if the house next door did not have a ravine premium, then I should not either and my assessment was lowered $50,000. You can clearly see the absurdity of this situation. I asked because the street was new (2 years old at the time) that they would advise everyone on the ravine side of the street that they should get the same break, they said "no" since the others had not appealed their assessment. I told them that while I appreciated the decrease in my taxes, that this was patently unfair to everyone else on the street and frankly the correct response would have been to increase the house next door by the ravine premium, something I am sure my neighbour would have hated. That said; rather than correct the 1 error; they preferred to give me a break and collect fairly or unfairly from the other 18 houses based on a higher valuation. Does this strike any degree of "fairness". If they concluded that I should not pay the ravine premium, then surely the other 15 or so houses who were charged this should not have paid it.

You are probably right that it is not the tax revenue reason but perhaps more that MPAC has come under so much fire for sloppy/inaccurate work that they make appeals difficult. Also, they know how the game works whereas most citizens go there without the knowledge or experience.

On another property I owned, MPAC increased for a ravine premium my rate by 21% 1 year. The neighbourhood, a subdivision all very similar housing; went up 5-7%. Even though I had successfully shown the 3 previous years that the street could not command the prices and that nothing had sold anywhere near the 21% increase rate ever on the street, I had to appeal MPAC's increases yearly with exactly the same argument and won each time. Finally the 4th year, I asked MPAC not to make me appeal the same argument again and they agreed to lower the assessment but by 10%. For 3% it was not worth starting to go to MPAC (the time involved for me). So not sure what MPAC's reasons are other than I guess they don't like to be shown to be wrong.
 

theflyingsquirrel

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Theoretically, the property tax revenue is maintained the same, but I believe as a matter of fact, it is not 100% true.
If you understand how slow the government adapt to change, and how many process they need to go through before any change is realized, the mill rate does not reflect immediate change to the property assessment.
So if your property tax go down by 10%, it simply cannot be realzied in the same year's tax system.

Also, if you think about it, if the MPAC have a high assessment value for all the properties, and hence the mill rate go down next year, who benefit most?
It is the politicians. They can tell people how much the property tax goes down and how they are doing a good job. Also, they have more room to increase the property tax because the mill rate is low. It is a scheme.

Interested, I checked the MPAC site, for residential properties, you will have to file the reconsideration form with MPAC before you can go to assessment review board. However, MPAC usually do not give you much consideration if you do not challenge the assessment review board. In other words, if you want them to take you seriously, you will have to go to the assessment review board.
If a property, or a portion of it, is classified as residential, farm or managed forest, the property owner must first complete the Request for Reconsideration (RfR) process before becoming eligible to file an appeal with the Assessment Review Board (ARB).
http://www.mpac.ca/pages_english/procedures/procedure_for_the_assessment_review_board_appeal_process.asp

For commercial properties, you can skip the MPAC and go directly to ARB. They started this requirement a few years ago. I think it is bacause too many people know the fact that MPAC will ignore you so they go directly to the ARB.

Interested, one question for you. Do you have much success with the ARB with the one who you hired to deal with the commercial property?

Here is a provincial auditor's report summary from Canadian justice review board.
OTTAWA — December 11, 2010- This week's provincial auditor's report into the Municipal Property Assessment Corporation's management is 18 pages long but it can be summarized in three words: They are incompetent.
http://www.canadianjusticereviewboard.ca/ARCHIVES.htm
 
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interested

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We did appeal about 5 years ago and yes, there was a decrease in the valuation. About 8% as I recall though we requested 15%. We applied for last year reassessment and I have not heard anything back as of yet. The property valuation was up 15%. The other thing I found out as I pointed out with my example of the ravine property which is residential is that MPAC made the same evaluation error year after year, necessitating constant requests for reviews (which were won successfully year after year) only to have the same flawed logic applied by MPAC the following year.

Your point "theflyingsquirrel" is correct about government not adapting quickly. I believe the mill rate is set before most appeals are heard so any decrease ends up costing the municipality at least for the current year..
 

theflyingsquirrel

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Interested, I thought the reassessment is being done every other 4 years. The last time it was done is 2008. How would they increase year after year if the major reassessment is going to be 2012?
I know they increase the property tax in 4 installments according to the assessment value. Could they increase your property value according to that installment?

So for your commercial property, you sucessfully have it reduced by 8%, but they have it increase it by 15% next year? This sound like an revenge to me.....
MPAC surely sounds like a wolf disguised as a sheep.
 

interested

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Sorry I was not clear. This occurred more than 5 years ago. The latest valuation was 15% 4 years later. The increase is 1/4 of that amount yearly to reach the 15%. In fairness, they are not "revengeful" in my view. They try and evaluate and as a rule, as there is so much variation on properties, it sometimes just goes astray when they apply uniform formulas to an area. One can attack the assessment yearly even though it is done on a 4 year basis I believe. All I can say is that last year we gave over the valuation that MPAC sent to be challenged. It may have been a projected 2012 evaluation figure, I honestly don't remember.
Sorry I can't be of more help. Would be a fair amount of work for me to locate that right now.
 

interested

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I would do an MPAC appeal first.
As I said, on residential I have had some success. Just watch the deadlines and if MPAC not heard, pay the fee for the ARB so that you can appeal later. You can of course go yourself but be prepared to defend your position. MPAC sends in an assessor and as I said, they are more concerned in my experience in justifying what they did rather than any sense of fairness, which is what is so absurd. I figure people like the name I P.M.'ed you have more experience and are playing on a more level field with the assessors and know how the "game is played" better than I certainly do. Having been through it with residential, I can do those now but commercial I rely on "pros". The reason, it may cost something (though you don't pay if they don't win you something back) but despite MPAC allowing comparables; I find it difficult unless you are very informed to make strong arguments.
I was able to on the residential property because I had 2 and my own home in the same neighbourhood and hence had 3 to compare to, so when 1 was grossly out of whack, it was obvious to me... Despite this, the reviewer did not grant me that even though I had intimate knowledge and could state categorically that the house they appraised at highest was at least 15% below the value of my own home, which matched up wit the 2nd home but the 3rd was totally out of whack. I won't repeat the ravine silliness from above that they rather arrive at a conclusion for a wrong reason that do the "right" thing.
 

theflyingsquirrel

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I did the request of reconsideration to MPAC. They reply and said they have no right to change the assessment until next year which they do the reevaulation.
I do not believe in their sh.. I have already file my appeal to ARB.
 

interested

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actually Flyin Squirrel, I believe that is correct. The McGinty Liberals changed the laws so that assessments were to be phased in over a 4 year period as I recall. One would have had to object to the evaluation in year 1. All that is happening is the escalation is reaching the full evaluation of 2008 presently, having been raised yearly by approximately 1/4 per year over 4 years.
Good luck but I doubt they will deal with your appeal until next year.
 

interested

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I could be wrong on this.
You did the right thing anyhow by sending it to ARB.

As I said before, MPAC is a ridiculous system. Just to re iterate I had a property on a ravine. They said the ravine was worth X dollars. When I pointed out that my neighbour had been missed and had no ravine premium, instead of appraising him higher (for the ravine premium), they discarded my premium. At the appeal, I asked if they would therefore advise all those on the street who paid the premium, they said no. I stated I thought it was ridiculous that they would rather continue what was tantemont to theft from all these other property owners. If I as an individual knowingly did this, I would be accused of a crime in all likelihood. Anyhow, the following year my assessment went up to reflect the ravine premium again (which was correct).
Clearly a just tax system was not in the purvue of MPAC at least that is my view from that experience. Just attempts to justify themselves. Good luck with the appeal.
 

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