How Ontario Property Tax Actually Works: Mill Rates, MPAC Assessments, and the Tax You Pay in 2026

Understanding the Property Tax Formula

Property tax in the Greater Toronto Area is calculated using a straightforward formula: your property’s Current Value Assessment (CVA) multiplied by the mill rate. However, the devil is in the details. The CVA is determined by MPAC (Municipal Property Assessment Corporation), a provincial Crown corporation responsible for assessing all residential properties in Ontario. The mill rate—expressed as a percentage—varies significantly across Ontario municipalities and combines city, regional, and education tax components.

This formula means two properties with identical market values can generate vastly different tax bills depending on location. A $1 million home in Toronto pays approximately $6,600 annually in property tax, while the same property in Hamilton costs $11,800—nearly double—due to Hamilton’s higher mill rate of 1.18% versus Toronto’s 0.66%.

MPAC’s Current Value Assessment Explained

MPAC’s CVA is not the price you paid for your property or necessarily what it would sell for today. Instead, it represents MPAC’s estimate of the property’s market value on a specific valuation date. The last full reassessment across Ontario was based on the 2016 valuation date, and properties have received rolling adjustments since then. A full reassessment expected around 2027-2028 will reset all CVAs based on a new valuation date, which historically causes significant shifts in assessed values and property taxes.

Many Ontario homeowners are unaware that their CVA may not reflect current market conditions. In rapidly appreciating markets like Toronto, Markham, and Vaughan, assessments from 2016 can significantly undervalue properties. Conversely, in slower markets, some properties may be overassessed relative to recent sales. Understanding your CVA is the first step to determining whether your property tax is competitive.

Mill Rates Across Ontario Municipalities in 2026

Mill rates in Ontario vary considerably by municipality. Toronto’s combined residential mill rate sits at approximately 0.66%, making it the lowest in the region. Oakville follows at 0.71%, and Burlington at 0.79%. Mississauga’s rate is 0.83%, while Brampton, Markham, Vaughan, Richmond Hill, Aurora, and Newmarket all cluster around 0.95 to 0.99%. Hamilton has the highest rate at 1.18%.

Why is Toronto’s rate so much lower? Toronto has significantly higher CVAs per property compared to 905 municipalities. The city can raise the same amount of tax revenue at a lower mill rate because the assessment base is substantially larger. However, this doesn’t mean Toronto homeowners pay less tax overall—Toronto layers on additional taxes including the Toronto Municipal Land Transfer Tax (one-time at purchase), the Vacant Home Tax (annual if vacant over six months), and various other levies that offset the lower mill rate.

Calculating Your Annual Property Tax: Examples

Let’s walk through real examples. A $1 million detached home in Toronto pays approximately $6,600 in annual property tax ($1,000,000 × 0.0066). The same property in Markham costs roughly $9,500 annually ($1,000,000 × 0.0095), and in Hamilton approximately $11,800 ($1,000,000 × 0.0118). This variation becomes more pronounced at higher values. A $2 million Rosedale property in Toronto incurs roughly $13,200 in annual property tax, while an equivalent $2 million property in Markham costs about $19,000—45% higher despite being the same price.

These calculations assume the CVA matches the purchase price, which is often not the case. When MPAC’s assessment is lower than recent purchase prices, your actual tax burden may be less than these examples suggest. However, you should never assume your CVA equals your purchase price and should verify your assessment with MPAC.

Toronto’s Layered Tax Structure

Toronto homeowners face multiple overlapping taxes beyond the base mill rate property tax. The annual property tax of approximately 0.66% is the foundation. On top sits the Vacant Home Tax—a 3% annual tax on the CVA if your property sits vacant for more than six months in a calendar year. The federal Underused Housing Tax applies at 1% annually to foreign owners and certain corporations. At purchase, Toronto imposes its own Municipal Land Transfer Tax using the same brackets as Ontario’s Land Transfer Tax, effectively doubling transfer tax for Toronto buyers. First-time homebuyers receive exemptions on the Ontario LTT but not Toronto’s version.

This layered approach means a foreign investor or speculative buyer in Toronto faces cumulative annual taxation that can reach 3 to 4% of property value, making Toronto significantly more expensive to hold vacant or speculate with compared to 905 communities.

The 905 Tax Picture: Lighter Layering

Most 905 municipalities have a simpler tax structure. Annual property tax ranges from 0.71% (Oakville) to 1.18% (Hamilton). The federal Underused Housing Tax applies only to foreign owners and certain corporations at 1% annually. Ontario’s Land Transfer Tax applies at purchase (with first-time buyer exemptions). Foreign buyers additionally pay the Non-Resident Speculation Tax (NRST) of 25% at purchase in the Greater Golden Horseshoe region, which includes most of Ontario.

While 905 mill rates are higher than Toronto’s, the absence of annual vacancy taxes and municipal transfer taxes means cumulative holding costs are often lower. A speculator in Markham avoids Toronto’s Vacant Home Tax, potentially saving thousands annually on an empty property.

Foreign Buyers and Investor Tax Stack

Foreign investors and speculators in Ontario face a complex tax stack. At purchase, they pay the NRST (25% in Ontario on the property price), plus Ontario LTT, plus Toronto’s MLT if buying in Toronto. Annually, they’re subject to the federal Underused Housing Tax (1% of value), plus regular property tax (0.66% to 1.18% depending on location), plus the Vacant Home Tax if the property is vacant over six months (Toronto only, 3%).

For a foreign buyer purchasing a $2 million Toronto property, this cumulative burden easily exceeds 35% in year one when purchase taxes are considered, and continues at approximately 5% annually thereafter. These taxes were deliberately designed to cool speculation and encourage occupancy, and they significantly alter investment math for non-resident purchasers.

Appealing Your MPAC Assessment

If you believe your CVA is inaccurate, you have recourse. File a Request for Reconsideration (RfR) with MPAC by March 31 of the tax year in question. The process is free. If MPAC denies your RfR, you can appeal to the Assessment Review Board, which involves a more formal hearing and may include legal costs.

Before filing, compare your CVA to recent comparable sales on your street. If MPAC’s assessment exceeds the average selling price of comparable properties by more than 10%, an RfR is likely worth filing. MPAC reports indicate that approximately 15 to 25% of RfRs result in assessment reductions. A successful appeal can reduce your annual tax bill by thousands of dollars, especially as you approach the 2027-2028 full reassessment.

Property Tax Arrears and Sale Risk

Property tax arrears carry serious consequences. Municipalities can initiate a tax sale after two to three years of unpaid taxes, depending on local bylaws. A lien attaches to the property, and any new buyer assumes responsibility for the arrears. Title insurance typically protects against unknown arrears at closing, but it’s critical to verify tax account status before purchasing.

Incorporating Property Tax Into Your Purchase Decision

Property tax should never be an afterthought in your purchase decision. Calculate the after-tax cost of ownership across municipalities you’re considering. A lower purchase price in a higher-rate municipality may result in higher lifetime costs than a pricier property in a lower-rate area. Additionally, if you plan to hold the property vacant or as an investment, factor in Toronto’s Vacant Home Tax and the federal Underused Housing Tax. These taxes can swing the decision between holding a property and selling it.

Alex is a real estate sales representative, not a tax advisor; consult a tax professional for property tax planning and to understand how assessments and layered taxes apply to your specific situation.

Common Property Tax Mistakes

Many homeowners neglect to verify their CVA with MPAC after purchase, assuming the assessment matches their purchase price. Others fail to file RfRs when assessments are clearly inflated, leaving thousands of dollars on the table over years of overpayment. Investors frequently underestimate cumulative tax obligations when comparing Toronto to 905 markets, focusing only on mill rates while ignoring vacancy taxes and transfer taxes. First-time buyers sometimes overlook the Toronto MLTT, which is not waived for first-time purchasers even though the Ontario LTT is.

Looking Ahead to 2027-2028 Reassessment

The upcoming full reassessment will recalibrate all CVAs based on a new valuation date. Markets that appreciated significantly since 2016—like Toronto, Markham, and Vaughan—will likely see substantial assessment increases, pushing property taxes higher unless mill rates are correspondingly reduced. Property owners in these areas should monitor MPAC communications and consider RfRs aggressively in the years leading up to reassessment to establish lower baselines before the reset.

Alex is a real estate sales representative, not a tax advisor; consult a tax professional for comprehensive property tax planning and assessment strategies tailored to your portfolio and timeline.

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