Commercial property tax assessments

If you own a commercial property, a recent decision of the Ontario Assessment Review Board might interest you. At issue is the way the Municipal Property Assessment Corporation (MPAC) determines the “current value” of income-producing properties. Current value is supposed to reflect the price a seller could obtain for a property if it were up for sale. The value of a commercial property is dependent upon the value of the leases in the building. In arriving at a current value assessment for six large bank towers in downtown Toronto, MPAC considered the value of the tenancies in the building. But the Assessment Review Board disagreed that this approach qualifed as a current value assessment. Only the value of the property (as if the building were vacant and unleased) should be considered in arriving at a valuation. 

The City of Toronto is seeking leave to appeal this decision to the Divisional Court.

In the interim, it you’re a commercial property owner waiting for your updated assessment (as of January 1, 2008), you may consider appealing this assessment once you receive it. This is assuming that MPAC will be continuing its practice of assessing commercial properties based upon a valuation of the leaseshold interests, contrary to the recent decision of the Assessment Review Board.

A good review of the case and the issues can be found on the City of Toronto website and the MPAC website.