25 Apr

Property tax: 10 things you need to know

General

Posted by: Drummond Team

By John Spears | Tue Sep 07 2010

 

For homeowners property tax is one of the most painful and visible taxes going. Instead of having the tax skimmed off their pay cheques at source, they generally have to cough up hefty installments either monthly or four to six times a year. Alternatively, they can see their mortgage payments swollen even more, if their lender insists on making the tax payments.

Tenants pay property tax, too – arguably at higher rates than homeowners in some municipalities – but landlords build it into their rent. If you can’t avoid it, you can at least understand it.

Here are ten things you need to know about property tax.

 

1. How is it calculated?

Your municipality takes the assessed value of your home and applies the tax rate. If your home is assessed at $300,000 and the tax rate is 2 per cent, your tax is 2 per cent of $300,000, or $6,000 a year.

2. How is my assessment determined?

A non-profit agency called the Municipal Property Assessment Corporation (MPAC) assesses your property, and sends the owner a notice of its assessment. The assessment is supposed to reflect the price it would likely fetch if you put it up for sale. MPAC tracks real estate sales neighbourhood by neighbourhood so it can put a value on a one-bedroom condo in the St. Lawrence neighbourhood, say, or a four-bedroom detached home in Stouffville. It may reduce the assessment if the home is on a busy corner beside a gas station, or boost it if it’s on a prestigious street backing on ravine.

3. How is the tax rate set?

Your city or town council sets a tax rate through the annual budgeting process. The regional council, if there is one, also sets a tax rate. (Toronto has no regional government, but the other municipalities in Greater Toronto each have both local and regional governments.) Finally, the provincial government sets a tax rate for education. The three rates are added together.

If the local tax rate is 1 per cent, the regional rate is 1 per cent, and the education rate is 0.5 per cent, the total tax rate is 2.5 per cent. The city (or town or township) collects the tax on behalf of all the other governments, so you get just one tax bill.

4. I think my tax rate is too high

There’s not much you can do. Politicians on local and regional councils set property tax rates for their areas, and the provincial government sets a province-wide rate for education. If you don’t like the tax rates, you’ll have to persuade the politicians to change them, or run for office yourself.

5. I think my assessment is unfair

First, you should call MPAC at 1-866-296-6722. If a phone call doesn’t change your mind, you should ask MPAC to send you a list of the assessment on properties similar to yours. There is no fee. You can also send MPAC a list of properties you think are comparable and they will select six properties of their choosing. You can do this in the “About My Property” section of the MPAC website. Your assessment notice should contain the User ID and password you’ll need.

If you still think you’re over-assessed, you can make a “request for reconsideration,” an informal process in which you state your case in writing, and MPAC tries to respond within 60 days. Instructions are on the MPAC website. This is free.

6. I’m still not happy

You have one further avenue, which is appealing to the Assessment Review Board, a tribunal independent of MPAC. This is a more formal process involving a hearing before a board member. You can represent yourself, or hire a lawyer. You must pay a fee of $75. You must have already been through the “request for reconsideration” process, and must file your appeal within 90 days of the mailing date of your request for reconsideration decision.

7. If my assessment rises, do my taxes go up?

Not necessarily. If everyone’s assessment goes up 10 per cent, but the cities and school systems don’t increase their budgets, they should be able to lower their tax rates 10 per cent and still collect the same amount of money. It’s seldom that everyone’s assessment rises by the same proportion, of course. A hot housing market in one neighbourhood may drive up assessments faster in that area than in others.

8. Do businesses pay property tax?

They do. In fact, some business property owners in Toronto have long complained that they bear more than their fair share of the property tax burden.

9. What happens if I don’t pay?

You get charged credit-card type interest on unpaid tax. Toronto, for example, charges 1.25 per cent a month. If you put your head in the sand and continually refuse to pay, the municipality can seize your property and sell it to recoup the taxes, although this is a long and seldom-used process that often takes years. The property owner gets whatever is left over. This doesn’t happen often, but towns and cities do use this power in some cases if payments fall far in arrears.

10. Where does the tax money go?

Property tax goes to local governments to pay for services such as roads, parks, police, fire fighting, ambulance and transit. Municipal property taxes also cover part of the cost of welfare. Some of the proceeds also flow to the public and separate school systems; taxpayers are given the option which system to support.

John Spears is a Toronto Star business reporter. This article was commissioned for Moneyville’s launch.

15 Apr

Nicole Drummond is the proud sponsor of several sports team in the Ottawa area

General

Posted by: Drummond Team

Nicole Drummond is the proud sponsor of several sports team in the Ottawa area: Dominion Lending Pylons team in the Minto Hockey League, Dominion Lending Pylons team with the Coliseum Soccer 7’s League, the Dominion Lending Pylons softball team with the RA Centre, the Dominion Lending Pylons Hope Beach Volleyball team and the Orleans Maverick baseball team with the NCBL.


11 Apr

Sins of the father

General

Posted by: Drummond Team

The Baby Boomers have finally gotten old enough to officially retire. Well some of them anyway. The peak of Boomer retirement won’t happen for another 14 years or so.

 

By Gail Vaz-Oxlade | Online only, 4/04/11

 

I was born in the year that the most Boomers were born, and when it comes time for my twins and I to hang up our spurs, there’s no telling what the world will look like. Casting back to 14 years ago, the Canadian dollar was at 71.55 cents U.S. That’s different! Bank Prime was between 5 and 6%. That’s different! And the level of debt Canadians were carrying… oh, so very different!

Some of us still have time to get out of debt and make savings a priority before time runs out. Or we’ll have to reconcile ourselves that we will not stop working just because we’ve turned 65.
But there are also a few very important lessons in here for the generations who are following the Baby Boomers:

1. Having robust savings doesn’t count for much if you’re also walking around with a ton of debt. A Royal Bank survey found that 4 in 10 Canadians will retire with debt. I’m willing to bet, based on how delusional I’ve found people to be, that the number is higher. A subsequent survey reported in the Globe and Mail found that 62% of people plan to retire with a debt load. That’s a little more to my thinking.

The lesson: your balance sheet must balance. It’s not how much you have saved; it’s your overall net worth that really paints an accurate picture.

2. We used to aim to have our mortgages paid off by the time we swapped paycheques for retirement income. An Investors Group poll found that 56% of Canadians with a mortgage do not consider paying it off as an important factor in deciding when to retire. So more than half of us think retiring with a mortgage is now okay. Is that because we don’t have a hope of getting it paid off and we’re reconciled? If you’re living on less income, doesn’t having fewer fixed expenses just make sense?

The lesson: if you’re buying so much house that you can’t afford to pay it off during your working years, you’re setting yourself up to have a very stingy retirement.

3. If you can’t live within your means while you’re working, how the dickens are you going to do it when you’re living on a fixed income that is substantially less? Borrowing has made living beyond our means easy. Since most retirement income is predicated on receiving 30-50% less income, shouldn’t a body practice living on less so they can learn to be happy with what they have?

The lesson: You’re going to have a lot of demands on your money over your lifetime: retirement savings, educational savings for your kids, mortgage repayment. Learning to be happy with what 50-70% of your net income can buy means when you transition into retirement you won’t be assaulted by the concepts of frugality. And in the meantime, saving aggressively and paying off your mortgage means you’ll have more financial security.

The Big Lesson: Don’t make the same mistakes your parents did. Surely you’re smarter than that!

4 Apr

Votre cote de credit, cette mal connue

General

Posted by: Drummond Team

Publié le 03 mars 2011 à 08h35 | Mis à jour le 03 mars 2011 à 08h35

(Montréal) Tout le monde en entend parler, mais peu de gens savent de quoi il retourne: une cote de crédit R3, R7, ou R9, qu’est-ce que ça signifie?

Votre dossier de crédit, tenu par une ou l’autre des deux agences de cotation de crédit au Canada, Equifax et TransUnion, contient les informations sur vos (lourds) antécédents en matière de crédit: prêts en cours, limites des cartes de crédit, historique de paiements des comptes, etc.

 

Sur la base de ces antécédents, les agences de cotation établissent un pointage de crédit, sur une échelle de 300 à 900. «C’est un outil automatisé pour évaluer, selon les statistiques, le risque représenté», décrit Odette Auger, vice-présidente exploitation chez Equifax Canada. Plus le pointage est élevé, moins vous présentez de risques pour un prêteur.

 

La cote de crédit est une autre mesure de votre crédibilité financière. «C’est un standard utilisé par tout le monde, qui combine une lettre et un chiffre», explique Odette Auger.

 

La lettre décrit le type de compte. La cote R (pour revolving credit) réfère au crédit renouvelable, telles les cartes de crédit. Il y en a d’autres: O (Open) pour le crédit ouvert; I (Installment) pour les ventes à tempérament, une voiture par exemple. M (Mortgage) pour une hypothèque; C (Credit line) pour une marge de crédit; L pour une location.

 

Le créancier y associe un chiffre, qui caractérise la discipline de paiement de son client.

 

0: nouveau compte, pas encore évalué;

 

1: le compte est acquitté selon les termes du contrat;

 

2: paiement de 30 à 60 jours après l’échéance;

 

3: paiement de 60 à 90 jours après l’échéance;

 

4: paiement de 90 à 120 jours après l’échéance;

 

5: paiement plus de 120 jours après l’échéance;

 

6: cette cote n’existe pas;

 

7: versements réguliers en vertu d’une entente de règlements des dettes;

 

8: reprise de possession;

 

9: mauvaise créance, faillite, recouvrement, déménagement sans nouvelle adresse.

 

«Tout le monde rapporte l’information de la même façon, énonce Odette Auger. Ce n’est pas Equifax qui accorde ces cotes, c’est le créancier, lorsqu’il nous envoie l’information de crédit.» Cette cote est portée dans le dossier de crédit des agences de cotation, et elle a évidemment une influence sur l’octroi de nouveaux prêts.

 

Cependant, on entend plus couramment parler des cotes R. «En insolvabilité, c’est ce qu’on utilise», observe Josée Pomerleau, présidente de l’Association québécoise des professionnels de la réorganisation et de l’insolvabilité. «À R3, ça commence à être inquiétant: il y a là un signe avant-coureur d’insolvabilité.»

 

La cote R7 est plus répulsive encore, quoiqu’elle soit attribuée lorsqu’une entente de paiement pour régler les dettes a été respectée et complétée – une proposition de consommateur, par exemple. «Ça ne rend pas le prêt impossible à obtenir, mais ça rend les choses un peu plus compliquées, commente Josée Pomerleau. Les gens doivent s’expliquer.»

 

La cote de crédit R9 est l’équivalent de la croix qui marquait les maisons des pestiférés: elle fait fuir les prêteurs.