The value of new multi-residential development in Ottawa has increased by a whopping 78.85 per cent in the last four years, according to the latest province-wide assessment.
The Municipal Property Assessment Corporation(MPAC) deemed that the values of parking lots, new construction office buildings and existing multi-residential properties have also all increased by more than 50 per cent during the same span. That increase will be reflected in the new four-year assessment cycle that will be in effect from 2013-2016.
Other assessed value increases include:
– new construction industrial, 34.13 per cent;
– existing industrial, 30.64;
– residential, 26.33;
– commercial, 22.94;
– existing shopping centre, 16.59;
– existing large industrial, 14.44;
– new construction large industrial 12.29;
– new construction commercial, 11.74;
– existing office buildings, 10.56;
– and new construction shopping centre, 10.32.
Despite the increases in value, however, property valuation expert John Clark says tax increases are not guaranteed for commercial property owners in Ottawa.
“The most important thing to bear in mind is that an increase in your assessed value does not automatically translate into an increase in your municipal taxes,” said Clark, vice-president of Valuation and Consulting at The Regional Group of Companies Inc.
Takes hikes phased in by government
“But if you are in for an increase, the provincial government has introduced a phased approach for implementation to ease the impact on your wallet.”
Any tax increases are based on properties' assessed value in relation to the increases experienced by comparable properties in the market. If a property's increased value is higher than the average of comparable properties, there will be a tax increase.
Conversely, if a property's increase is less than the average, a reduction in property taxes may occur.
“To establish your property's assessed value, MPAC uses different models depending on the type of property to arrive at 'Current Value Assessment',” said Clark. “The first question to ask is, 'If I were to sell my property today, would its sale price be comparable to its assessed value?'”
Condo companies land banking
Earlier this month, Clark told the Ottawa Business journal (OBJ) that development pressures are pushing up the value of parking lots and that they will eventually be turned into residential towers.
“You've seen a number of condominium developers buying up parking lots as land banking,” he told OBJ.
One of those companies, Claridge Homes, has been buying plenty of land for development in recent years, including one 0.36-acre lot at the corner of Preston Street and Carling Avenue for $9.02 million earlier this year, the report said.
Chance of escaping tax increase? Zero
Commercial property owners not subject to tax increases in the latest assessment may still not be out of the woods, however: the City of Ottawa is expected to raise property taxes in the new year to cover municipal budget increases.
In October, some 286,000 Ottawa-area property owners received their assessment notices, which increased by an average of 6.4 per cent.
Similar to commercial properties, residential values have increased by 25.9 per cent since the last assessment was delivered in 2008, MPAC said in October. Since 2008, waterfront properties increased by 25.6 per cent and farmland by 38.7 per cent.
MPAC, which is a not-for-profit corporation funded by Ontario municipalities, has reference lists available at their media centre for property owners to check province-wide assessments in their municipality.