Farm properties include a large variety of working farms, farmland, farm outbuildings, specialized farms (e.g. poultry, ginseng), fruit or nut orchards, etc., and often have a residence located on the farm which is occupied by the owner/farmer.
Every four years, property owners receive a Property Assessment Notice when MPAC completes a province-wide Assessment Update based on the legislated valuation date. In 2016, MPAC will update the assessed value of every property in Ontario with a January 1, 2016 valuation date.
The new value indicated on your 2016 Notice will be used by your municipality/local taxing authority as the basis for calculating your property taxes for the 2017-2020 property tax years.
In the Assessment Act, an increase in assessed value is phased-in over four years. A decrease in assessed value is introduced immediately. Learn more about phase in.
Assessing Farm Properties
Our assessors are trained experts in the field of valuation and apply appraisal industry standards and best practices.
We undertake extensive analysis to determine farmland values and use only sales of farmland sold to farmers used for farm purposes, as legislated by section 19(5) of the Assessment Act.
Factors in Determining Farm Values
We look at these factors:
- We collect the data on sales of farmland to farmers. Sales of farms to purchasers who intend to use them for other purposes are not included.
- We classify farmland according to how productive it can be, and place it into one of six quality classes. Class 1 farmland is the most productive and therefore the most valuable class of farmland.
- We also establish geographic areas according to climatic region, soil type/suitability and similar farmland markets.
- We consider how much it would cost to rebuild the farm house and take into consideration the location, size, age and quality of construction.
- If the farmer lives in the residence, one acre of land supporting the residence is valued as farmland and is classified as residential. If the house is rented out to a non-farmer, any land that is used by the occupant is assessed as residential land and is classified as residential.
- We establish the replacement cost of the outbuildings, taking into consideration the design, age, size and quality of construction.
- We value other buildings, such as wineries and stores, according to the cost of replacing them, taking into consideration the building’s design, age, size and quality of construction. They are valued and classified according to use (e.g., commercial, industrial, residential).
In addition to valuing properties, we also classify every property in Ontario.
There are seven major property classes: residential, multi-residential, commercial, industrial, pipeline, farm and managed forests. There are also several sub-classes for properties with specific or unique characteristics.
Farm properties that meet the eligibility requirements will have farmland and associated outbuildings placed in the farm property class and are taxed at up to 25% of the municipal residential tax rate. An application for inclusion in the Farm Property Class Tax Rate Program must be approved by the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) on or before the specific date set out in the table included in Section 8.1 of Ontario Regulation 282/98.
A Farm Forestry Exemption (FFE) may also apply to the property. Under Section 3(19) of the Assessment Act, one acre of every10 acres of farmed property may be entitled to receive this exemption. FFE is warranted if the property is assessed as a farm and the property has some forested or woodland portion that is not subject to either the Managed Forest Tax Incentive Program (MFTIP) or the Conservation Land Tax Incentive Program (CLTIP).
If a portion(s) of a farm property is used for non-farm purposes, the portion is valued and classified according to its use. This is to ensure that the appropriate value and tax class is applied to the various uses of the property.
Where there is a farm residence occupied by the farmer, this is assessed in the residential property class along with one acre of land valued at the farmland rate. Where there is a residence on a farm property that is occupied by a non-farmer, this is assessed in the residential property class along with one acre of land valued at the residential rate.
Non-Assessment Update Years
In non-Assessment Update years, MPAC continues to review properties to ensure our records are accurate and up to date. For example: homes are constructed, renovated or added on to, buildings are added or removed from a property or there is a change in use on a property. Any change to a property during the year will result in a new Notice being mailed to reflect the changes.