Originally published in the Toronto Star on April 9th, 2011. To go to the Toronto Star website please click here
Dragica Donia bought her downtown Toronto row house more than two decades ago, figuring that it would suit her well during her retirement years.
But now, at 76, she’s worried everything will have to change. High property taxes mean she might not be able to continue living in her modest residence near the popular Little Italy neighbourhood.
“This is a very real concern to me,” said the 76-year-old senior, a retired administrative assistant. “I am going to have to sell my home and rent if taxes keep going up.
According to property assessment data obtained by the Star’s Catherine Farley, the value of homes in Donia’s area has increased overall by 18 per cent since 2008. That means she may be in for a higher assessment in the future.
It is a story that is being played out in neighbourhoods across the GTA, all of which have seen a remarkable surge in house prices over the past decade. But that comes with a downside.
In particular, the cost of houses in the trendy and in-demand neighbourhoods that have driven demand have soared in value. And that could mean higher taxes for some homeowners and a real crisis for those on fixed incomes, like Donia.
Leaving her house would be a difficult decision for the divorced woman, who immigrated to Canada from Yugoslavia in 1963. This is where her friends are. She walks to the doctor, the dentist and the baker. When she had a heart attack several years ago, it was her neighbour who took her to the hospital and saved her life.
“It’s very hard for me to give this up, but when your pension goes up a few bucks and your taxes go up a whole lot more, you have to make a decision what to do,” said Donia. “I shouldn’t be in this position. But I am.”
With data from the Municipal Property Assessment Corp. (MPAC), the provincial non-profit that oversees the assessments, the Star got a sneak peek into the potential impact of rising property prices across the GTA. For houses that sold in 2010, we compared the selling price to the 2008 MPAC valuation.
The average 2010 resale price compared to the average 2008 assessments shows that property prices increased by 15 per cent in the Toronto market. In the 905 area, prices have increased by 13 per cent.
But some neighbourhoods, including Donia’s, have seen more outsized increases. Among other areas that have gentrified over the years, downtown east has seen prices increase by 24 per cent and downtown west by 22 per cent.
Under provincial law, assessments are revenue-neutral to municipalities, which means municipalities get no additional gain from increased assessment values — the burden of taxation simply shifts to more highly valued areas.
The assessments are done on a four-year cycle. Property owners last received their assessment notices in the fall of 2008 for the 2009 taxation year. The next province-wide assessment will take place in 2012, for the 2013 taxation year.