City of Toronto Proposed Property Tax Increases and Key 2025 Deadlines for Property Owners

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This bulletin outlines the proposed tax rate adjustments for Toronto, as well as other important deadlines for tax relief applications, and offers insights into navigating the complexities of Ontario’s property tax landscape for the upcoming year.

On January 13, 2025, the City of Toronto launched its 2025 Budget Process, unveiling key changes to property tax rates that will impact homeowners and businesses alike. With significant rate increases proposed across various property categories, including residential, multi-residential and commercial, understanding the nuances of these changes is essential for property owners.

The following are the proposed property tax rate increases set out in the City of Toronto’s Budget Committee’s report:

• Residential and New Multi-Residential – 5.4% (together with the already-approved annual Building Fund increase of 1.5%, the total rate increase is 6.9%)
• Multi-Residential – 2.7% (together with the already-approved annual Building Fund increase of 0.75%, the total rate increase is 3.45%)
• Industrial (manufacturing and production) – 5.4%
• Commercial (retail, office, warehouse and anything else not classified in the above-noted tax classes) – 2.7%
• New Multi-Residential (Municipal Reduction) – This is a new subclass to the New Multi-Residential tax class, for the 2025 tax year, which applies to any newly constructed multi-residential property built pursuant to a building permit issued as of November 14, 2024. Properties in this subclass will initially be taxed at a rate that is 15% lower than the existing New Multi-Residential tax rate for 35 years, and then increased annually at the same rate as the New Multi-Residential Tax Class.

It should be noted that property assessment values, which are determined by the Municipal Property Assessment Corporation (“MPAC”), will continue to be based on a January 1, 2016, current value for 2025 and should therefore be the same as the assessment values in 2024, subject to relevant changes such as renovations, improvements or demolitions.

Owners of residential properties in Toronto have until April 30, 2025, to file a declaration regarding the 2024 occupancy status of their property. Owners must file this declaration, even if the property is their primary residence, tenanted or exempt (and no tax will be payable). Failing to do so will result in the property being deemed vacant, and a Notice of Assessment for Vacant Home Tax, set at 3% of the property’s current value assessment, will be issued.

Our previous bulletin outlined changes to Toronto’s Vacant Home Tax. For more information regarding the Vacant Home Tax, including a list of exemptions, visit the city’s Vacant Home Tax website.

February 28, 2025, is the deadline for submitting a tax relief application to the Ontario municipality in which a property is located. Tax relief (cancellation, reduction or refund) may be available due to the following events having occurred during 2024:

• change in use to a tax class that attracts a lower tax rate;
• land becoming vacant land or excess land;
• land becoming exempt from taxation;
• building on the land being destroyed or damaged due to fire, demolition or otherwise;
• applicant is unable to pay taxes because of sickness or extreme poverty;
• mobile unit was removed;
• applicant was overcharged due to a gross or manifest error that is clerical or factual in nature (and not an error in judgment in assessing the property); and
• repairs or renovations prevented the normal use of the land for a period of at least three months during the year.

A registered charity occupying Ontario property in the commercial or industrial tax classes can apply for a rebate of 40% of its realty taxes by February 28, 2025, provided it meets the eligibility requirements.

Property Assessment Notices for the 2025 tax year were distributed in the fall of 2024. The continued postponement of the next provincial reassessment has meant that property assessment values have remained based on a January 1, 2016, current value for nine years (even though reassessments were to take place every four years). This means that the assessment value shown for a property has little to no relevance to today’s real estate market and/or a property owner’s own view of their property value. Many property owners remark how their assessment values are “so low” but, again, it’s important to remember these values reflect an assessment from nine years ago.

To that end, it is essential that property owners ensure their property assessments are reviewed for the following reasons:

1. To ensure that no increases have occurred to the assessment values since 2017, unless the property has been subject to renovation, expansion or demolition;
2. While there may be grounds for MPAC to adjust its valuation of a property since 2017 and increase the assessed value, there are limitations on the extent of these changes and the arguments available to challenge such increases;
3. If the property has physically changed since 2017, which has detrimentally impacted the property’s value, then a reduction in the assessment value may be warranted; and
4. To the extent the property’s assessment value has never been reviewed, a successful appeal launched in 2025 can impact future tax years.

Note that the deadline to file a request for reconsideration or an appeal for 2025 is March 31, 2025.

The Municipal & Land Use Planning Group at Aird & Berlis LLP is available to review your property assessment notices and advise you with respect to appealing your assessment values for the 2025 tax year. Please reach out to the author or a member of the group for more information.