Property Tax

How the bill is calculated

The formula looks simple: assessed value x tax rate = property tax. The rate, sometimes called the mill rate, is set each year by your municipality; a provincial assessment authority or the municipal roll supplies the assessed value. Rates vary widely across the country, but in big cities they often land somewhere between 0.25% and 1.2% of assessed value per year (as of July 2026, illustrative only). Lower-rate cities are typically the ones with the highest home prices, so a low percentage does not necessarily mean a small bill.

The direction of the calculation matters more than the formula. Your city first decides its budget, then sets the rate needed to raise that amount from the total assessment base. The rate is an output, not an input.

Assessed value vs market value: the most misunderstood part

Your assessed value comes from an assessment authority: MPAC in Ontario, BC Assessment in British Columbia, the municipal assessment roll in Québec. Each values your property as of a fixed valuation date that can lag the market by years. Ontario is the extreme case: assessments there are still based on a January 1, 2016 valuation date because reassessments were repeatedly postponed (as of July 2026). Your assessed value can therefore sit far below what your home would sell for today, and that is normal.

Here is the part almost everyone gets wrong: a rising assessment does not automatically mean higher tax. Because the city sets the rate to raise its budget, what matters is how your assessment changed relative to everyone else's. If every assessment in town doubles and the budget stays flat, the rate simply halves and the average bill does not move. Your tax goes up only if your property's value rose faster than the average, or if the city raises its budget. A reassessment year redistributes the tax burden; it does not create new revenue by itself.

If you think your assessment is too high, compare it with similar homes nearby; assessments are public. If comparable homes are assessed lower, you can file a request for reconsideration (or the local equivalent) and then a formal appeal. There is usually no fee for the first step, and the deadline each year is strict.

What the bill funds, and the extra lines on it

The core of the bill pays for municipal services: roads, transit, police and fire, parks, libraries, water and waste in some cities. In Ontario, the bill also carries a provincially set education portion. In Québec, school taxes arrive as a separate bill from the school service centre. Some bills add local improvement levies, which recover the cost of a specific project on your street (new sewers, sidewalks) from the properties that benefit, sometimes for years.

Paying it: instalments, or through your mortgage

Municipalities typically bill in two to eleven instalments per year, often with a pre-authorized monthly option. Alternatively, many lenders collect an estimated amount with each mortgage payment into a property tax account and pay the city on your behalf; some insured mortgages require this. Either way, lenders count property tax when qualifying you: it is part of the housing costs in your GDS ratio.

Note that property tax is an annual, ongoing cost, entirely distinct from land transfer tax, the one-time tax you pay when you buy.

New construction: the supplementary bill surprise

Buyers of new builds routinely get caught by supplementary (or omitted) tax bills. When you move in, the assessment roll often still values the property as vacant land, so your first bills look pleasantly small. Months or even a year or two later, the assessment authority values the finished home and the municipality issues a retroactive bill for the difference, sometimes covering more than one year at once. Budget for the full, realistic tax from day one and set the difference aside.

Relief programs

Most provinces and many municipalities offer relief for specific groups, generally seniors and people with disabilities. British Columbia is the prominent example: its property tax deferment program lets eligible homeowners 55 and over (among others) defer the tax at low interest until the home is sold, and the separate home owner grant reduces the bill outright for many owner-occupiers (as of July 2026). Other provinces and cities run their own deferral, rebate or grant programs with varying rules, so check what applies where you live.