Ontario Cities With the Lowest Property Tax Rates in 2024

Want to reduce your property tax bill? Explore Ontario’s top cities with the lowest tax rates and find the best options for your next home investment.

By Josh Sherman | 8 minute read

Homeownership comes with a lot of perks, but there are also expenses, such as property taxes — and these can add up.

Taxes are an unavoidable reality of homeownership in Ontario.

There are taxes when you buy: homebuyers are charged at least one provincial land transfer tax upon purchasing a home in Ontario (two if your home is in the City of Toronto, which has its own tax).

Sometimes, there are taxes when you sell. Thanks to something called the principal residence exemption on capital gains taxes, Canadians don’t pay any tax on the profits realized from the sale of their principal residence (where a person lives most of the time). However, capital gains on secondary properties, such as cottages or an investment rental property, are taxed.

Homeownership also comes with recurring taxes. For instance, certain municipalities apply taxes on homes that are left vacant. This is done to encourage owners to rent out their unused properties and increase the supply of available housing. While such policies vary depending on local governance, there’s at least one recurring levy that practically all Ontario homeowners face year after year: property taxes. 

These taxes can add thousands of dollars to annual ownership costs, so homebuyers should budget accordingly. To help inform potential homebuyers, this article will explain what property taxes are, how they’re calculated, and pinpoint where to find the lowest property taxes in Ontario.

What Are Property Taxes? 

Property taxes are set annually and collected by municipalities across the province.

The property tax that a municipality collects is used to pay for the services and infrastructure it delivers and maintains, such as public transit, garbage collection, snow clearing, road repairs, amenities, and police and fire departments. “It covers something in every department. It’s all the operating costs of all the departments. It’s all the services provided,” says David Amborski, a professor at Toronto Metropolitan University’s School of Urban and Regional Planning as well as founding academic director of TMU’s Centre for Urban Research and Land Development. “It covers all the operations of government, unless they can have other revenue sources cover part of them,” he tells Wahi.

According to the Federation of Canadian Municipalities, about 50% of the revenue that cities in Canada generate comes from property taxes. “Some municipalities have more reliance on property taxes than others,” says Amborski. He notes other possible revenue sources for municipalities come in the form of grants from the provincial government or separate user fees. “All these things come into play,”  he continues.

If you’re looking at the places with the lowest property taxes in Ontario, Amborski suggests it’s important to also consider what kinds of user fees are being charged in addition to property tax. A municipality could have some of the lowest property taxes in Ontario but higher user fees tacked on.

How Are Property Taxes Calculated 

To find the lowest property taxes in Ontario, there’s more than one factor to consider.

The calculations that determine how much a homeowner pays are based on two major components: the assessed value of your property, and the total residential property tax rate. Your property tax is calculated by multiplying the assessed value of your home, which appears on your property tax bill, by the total residential tax rate.

Here’s a breakdown of both components, beginning with home value assessments. 

How Are Ontario Home Values Assessed?  

In Ontario, home values are assessed by the Municipal Property Assessment Corporation, or MPAC for short. Created by the province, MPAC started operating at the end of 1998 as an independent not-for-profit corporation. It is funded by Ontario’s 444 municipalities and has assessed more than 5.6 million properties since its inception. 

When assessing a property’s value, MPAC considers as many as 200 factors, though there are five main determinants: location, lot size, square footage, age, and the quality of the home’s construction. In terms of build quality, MPAC includes any known renovations. Local municipalities notify MPAC when they issue homeowners building permits, which are needed for substantial renovations.

Note that a home’s assessed value doesn’t necessarily indicate what it would sell for on the open market. For instance, the assessment doesn’t account for current market conditions, such as supply and demand dynamics. Nor does it consider a homeowner’s individual circumstances. For example, someone under financial strain may be willing to sell a property for less than its value.

MPAC most recently assessed home values in 2016. Another assessment was scheduled for 2020 but postponed amid the pandemic. The organization continues to reassess properties when they are upgraded, but this is done relative to 2016 values. That means that a condo built in 2020 would be valued based on what it would have been worth if completed in 2016.

Since the last assessment, home prices have soared, and some might be concerned that the next assessment will usher in much higher taxes as a result of increased property values. However, that may not be the case. In fact, in some situations, a homeowner’s property tax could actually decrease, according to MPAC. “In the case of a province-wide Assessment Update, an increase in a property’s MPAC-assessed value does not necessarily mean that the property’s taxes will increase,” notes MPAC in a statement to Wahi. “In this situation, the important factor is not how much an assessed value has changed, but how an assessed value has changed relative to the average change for the property type in a municipality,” the statement continues.

During a province-wide assessment year, if the rate at which a home’s value has increased since the last assessment is below the average in its property class, it’s likely the property taxes will decline. Other years, a higher assessed value would result in a bigger property tax bill if the total municipal residential property tax rate stayed the same or increased.

Ontario homeowners can check the value of their home, as well up to 100 others, on MPAC’s AboutMyProperty portal.

Total Residential Property Tax Rate Explained 

The total residential property tax rate is the sum of multiple rates which vary from municipality to municipality. Municipal governments set a municipal tax rate for different property types, and all municipalities collect an education tax, which funds schools and is determined by the province. Some municipalities collect additional property taxes as well. For instance, the total tax rate in Markham also collects a tax for the regional government of York, and Toronto applies a City Building Fund tax, which supports transit and housing investments.

The total of these rates is added up and then multiplied by your home’s assessed value.

As an example, take the average-valued home in Markham. This city consistently ranks as having the lowest property taxes in Ontario (by rate. In Markham, homeowners pay a tax rate of 0.680463%. The total residential property tax includes the city tax, (0.165611%), regional tax (0.361852%), and the education tax (0.153000%). Take Markham’s average assessed home value of $831,500 and multiply it by the total rate. You get an average tax bill of $5,658.05 per year.

The total residential property tax rate commonly applies to the entire municipality but not always. London, Ont., is one municipality that has location-specific rates within its borders. The City of Hamilton is another. “The result of area rating is that tax rates for certain services vary depending on where you live and the level of service offered by the City,” according to the City of Hamilton’s website. “Depending on the levels of service, the tax rate varies.” Unlike Toronto, Hamilton has both urban and rural communities, and area rating is meant to take into account the differences between the two.

How do Municipalities Determine Property Tax Rates? 

Each year, municipal governments set property local tax rates as part of the budgeting process. The rates are approved by the local council.

Since municipalities use property taxes to cover the operating and capital budgets, the level of service offered locally can move the needle considerably in terms of what homeowners pay. “If the cost of services provided by a municipality changes, the municipality may choose to adjust the tax rate. If it increases, everyone pays their fair share of the increase,” reads a statement that MPAC sent to Wahi. 

Property taxes are paid in installments through the year at intervals that vary from municipality to municipality, ranging from monthly options to bi-annually. 

Cities With the Lowest Property Taxes in Ontario in 2024 

Now that you know the basics (and maybe a little more) about property taxes, let’s look at the cities with the lowest property taxes in Ontario.

Wahi surveyed the total residential tax rate in 30 of the largest cities in Ontario, ranking them from lowest to highest.

Because the tax rate is only one part of the taxation equation, Wahi also collected the latest average assessed residential property values from MPAC and used it to estimate the tax bill for a typical home in each market.

When sorted according to tax rate, Markham has the lowest property taxes in Ontario out of any large city. Overall, seven cities had total residential tax rates of less than 1%, and municipalities located within the Greater Toronto Area boasted nine of the 10 lowest rates.

However, GTA cities also had the highest estimated average property tax bills by dollar amount. This is a result of elevated home values. “The property tax is based on the value of the property,” Amborski emphasizes.

Richmond Hill illustrates this point. The city with the highest average home value assessment also had the highest estimated tax bill despite claiming the third-lowest rate of the 30 large cities Wahi analyzed.

Conversely, Windsor had the highest residential tax rate (2.032805%) but the average assessed value of a Windsor home ($164,000) was far lower than in cities within the GTA — and therefore so are the estimated property taxes on a typical home. At $3,334, Windsor had the second-lowest estimated property taxes after Sarnia ($3,274).

Clearly, if you're looking to buy a home in a city with some of the lowest property taxes in Ontario, you'll want to consider more than the overall tax rate. Remember to consider home values as well as the kinds of services you expect your municipality to deliver.