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Synthia Kloot Senior Vice President, Operations, Colliers International
Oliver Tighe Executive Managing Director, Commercial Appraisal Group, Colliers
Tanya Nicholson Director, Marketing, Landlord and Investment Sales, Colliers International
Madeleine Nicholls Managing Director, GTA, Colliers
David Bowden Vice Chairman, Head of Strategy and Consulting, Colliers Canada
Scott Bowden Head of Valuation & Advisory Services, Colliers Canada
Sarah Bramley and Amy Vuong Colliers International
Brendan Neeson Executive Director of Property Tax Services, Alberta, Colliers International
Lex Perry Vice President, Marketing, Communications and Research, Colliers Canada
Colliers National Multifamily Team, East, Colliers Colliers National Multifamily Team, East
Karl Innannen Managing Director, Broker, Colliers, Kitchener
Shiri Rosenberg Director of Asset Strategy, Innovation and Community Spaces, Colliers
Colin Alves & Jean-Marc Dube Colliers Toronto & Montreal
Janina Franceschutti Executive V-P, National Investment Services, Colliers Canada
Eric Horvath, CCIM Senior Vice President & Partner, Colliers
Adam Grisack Director, Valuation & Advisory Services, Colliers Canada
Eliezer Timolien Senior Research Analyst, Colliers
Robyn Baxter Senior Vice President & Co-Managing Director, Workplace Advisory, Colliers Canada
Arnold Fox Senior Vice President, Real Estate Broker, Montreal, Colliers
Alam Pirani Executive Managing Director, Colliers Hotels
Sarah Bramley Associate Vice President, Workplace Strategy & Innovation, Colliers
Bill Hennessey Managing Director, Moncton Brokerage, Colliers
Greg Taylor Managing Director, Halifax Brokerage, Colliers
Dayma Itamunoala Associate Vice President, Sales Representative, Toronto Brokerage, Colliers
Grant Evans Senior Vice President, Victoria Brokerage, Colliers
Lilian Kan Director, Development Management, Colliers Strategy & Consulting, Vancouver
Bonita Craig & Robyn Baxter Colliers Canada
Daniel Holmes President, Brokerage Services | Canada, Colliers
Sehaj Gill Associate Director, Property Tax Services, Colliers
Jane Domenico Senior Vice-President & National Lead, Retail Services
Robin McLuskie Managing Director, Canadian Hotel Brokerage, Colliers
Douglas Pulver Executive Managing Director, Colliers Vancouver
Tonya Lagrasta Head of ESG, Colliers Real Estate Management Services Canada
Pat Phillips Senior Vice President, Colliers Vancouver Brokerage
Rob Newman Senior Director of Property Tax Services, Colliers
Adam Jacobs Senior National Director, Research, Colliers Canada
Darrell Hurst Darrell Hurst, Senior Managing Director, Brokerage, Colliers
Jean-Marc Dubé and Arnold Fox Colliers Montreal
Robert Brazzell Managing Director, Ontario Property Tax Services, Colliers Canada
Damian Bernacik Director, Legal Services, Property Tax Services
Susan Thompson Associate Director of Research, Colliers Vancouver
Peter Garrigan, SIOR Executive Managing Director, Greater Toronto Area | Colliers Brokerage
Rob Purdy Executive Director, Colliers Canada’s Valuation and Advisory Services
Ryan McIver Senior Vice-President and Broker, Colliers Toronto


Inequity of property taxation: What's the cost and what must be done?

Property taxes are the single-largest operating expense for most commercial real estate properties.

Canadian property taxes are ad valorem, or market-value based. In other words, within classes of property, higher-valued properties pay more property tax.

Annual property tax reassessments are the gold standard in market value-based property tax systems.

Annual reassessments link the quantum of property tax to the market value of property; they improve the accuracy, correctness and equity of the assessment roll and expedite the review, and where appropriate, the appeal of property tax assessments by owners. 

CRE owners, users pay price of reassessment delays

Where reassessments are not annual, and particularly in extreme cases where reassessments have not occurred for many years, all stakeholders suffer.

Owners of real estate are, however, particularly negatively impacted by reassessment delays. This is especially true for owners and users of commercial real estate.

In Toronto, Ottawa and elsewhere in Ontario, commercial property tax rates are significantly higher than those of residential taxpayers.

In 2022, commercial property owners in Toronto and Ottawa were respectively paying 3.36 and 2.39 times the property tax rates paid by residential property owners.

This occurs despite commercial property taxpayers not receiving the scope of services provided residential taxpayers.

In Ontario, the inequity of the property taxation imposed on commercial taxpayers has been compounded by recent reassessment delays. 

Absent a reassessment, the primary recourse of commercial real estate owners and users is the property tax assessment review and appeal process, and more particularly, the annual right of appeal.

This is as true in jurisdictions with multi-year assessment cycles as in jurisdictions with annual reassessments.

Recently in Ontario, the Municipal Property Assessment Corporation and some municipalities have challenged the annual right of appeal.

In the context of the extended seven-year assessment cycle, this has reinforced the value of annual reassessments and appeals.

Precedents for appeal rights

Fortunately, there are favourable precedents from Ontario courts and those of other jurisdictions regarding annual appeal rights.

Most recently, on Jan. 6, 2023, the Saskatchewan Court of Appeal in Brandt Properties Ltd. v Sherwood (Rural Municipality) reinforced the function of annual appeals during multi-year assessment cycles:

"As noted, the assessment appeal for each year is independent of appeals in other years. As a practical matter, it can of course be expected that, if the assessor takes the same approach in Years 1 and 2, and the property owner, on appeal, advances the same evidence and argument in Years 1 and 2, the results in both years will be the same. But, for Year 2, the issue will always be whether the evidence and argument advanced in relation to that year’s assessment establish assessor error. It will never be appropriate to approach a Year 2 appeal as if the property owner has the burden of overcoming the board’s or the committee’s Year 1 decision."

That said, the reassessment freeze, which produced this seven-year cycle, has compounded the challenges faced by commercial real estate owners and users in Ontario.

The amount of property tax remains based on real estate values as of Jan. 1, 2016.

Accordingly, relative changes in value between types of property are not reflected in taxation.

Usually, in market value-based property tax systems, the relative value of property is frequently adjusted with corresponding changes in property taxes. That has not occurred in Ontario since before the pandemic. 

To illustrate, consider the change in value experienced by industrial as compared with office property from 2016 through 2022, and the relative change in value of the five major commercial property classes: industrial, retail, apartment, hotel and office during this same period.

There was no corresponding change in property taxation during this period.

(Courtesy Real Capital Analytics, Trends and Trades Report)







(Courtesy Real Capital Analytics, Trends and Trades Report)








(Courtesy Real Capital Analytics, Trends and Trades Report)







Annual assessments benefit all stakeholders

Infrequent reassessments entrench inequity of taxation. Municipalities do not reimburse or provide other financial compensation to commercial real estate owners or their tenants if the property tax they paid failed to reflect their properties’ relative market performance.

While property taxes will be increasing, the redistribution of property tax associated with a reassessment will not occur as, for 2023 taxation, property assessment values continue to be based on values as of Jan. 1, 2016.

The transparency and fairness of the property tax assessment system in Ontario require property assessments based on current or nearly current values.

Even if this inequity is addressed by tax mitigation tools, transparency, equity and efficiency – the hallmarks of a market valued-based property tax assessment system – are sacrificed.

The solution is a reassessment for 2024, and reassessment annually thereafter. All stakeholders benefit when changes in property values are promptly reflected in annual assessments.

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