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Property taxes for businesses, charities and landlords

Landlord and tenant notices

Residential Rent Reductions

Under the Residential Tenancies Act, rents are automatically reduced if the municipal property taxes paid by the landlord for the residential complex have decreased by 2.5 per cent or more from the previous year's taxes.

Although the rent reductions apply to all residential complexes in these cases, the municipality is required to notify only those landlords and tenants of residential complexes with seven or more units.

Timing of rent reductions

Automatic rent reductions take effect on December 31 of the year the property taxes for the property decreased.

How are rent reductions calculated?
  1. In calculating automatic rent reductions, the property taxes for the current year are compared to the property taxes for the previous year to determine the percentage that taxes have decreased. The rent reduction must be calculated if the percentage decrease in taxes is more than 2.49 per cent.
  2. The actual property taxes levied for the rental property are used to calculate the rent reductions. Special levies, penalty charges, user fees, etc. are not included in calculating the rent reduction.
  3. The provincial factor used for property tax assessments in large rental buildings with seven units and more is 20 per cent, while a 15 per cent factor will be used for smaller rental buildings with 6 units or less. These percentages are, on average, the amount that taxes represent of a landlord's total rent revenue. To determine the percentage rent reduction in large buildings (seven units or more), the percentage decrease in taxes for the building is multiplied by 20 per cent.
   

Rental Buildings with seven units and more is 20% Example 1: % rent reduction = % decrease in Taxes for building X 20%

Rental Buildings with six units or less is 15%. Example 2: % rent reduction = % decrease in Taxes for building X 15%

Year 2013 taxes were:                $ 20,000

Year 2014 taxes were:                $ 18,000

The percentage decrease

in building taxes is: $ 20,000 - $18,000 x 100 = 10%

The percentage rent reduction is: 10% X 20% = 2%

Taxes must have decreased by 2.5 per cent or more for the tenants to get a rent reduction. In this case, the taxes have decreased by 10 per cent, so the tenants would receive a rent reduction.

The amount of the rent reduction is 20 per cent of the tax decrease. (see item 3 above)

The tax decrease is 10 per cent. Therefore, the rent reduction is 10 per cent x 20 per cent = 2 per cent.

Year 2013 taxes were:                $ 20,000

Year 2014 taxes were:                $ 18,000

The percentage decrease

in building taxes is: $ 20,000 – $18,000. x 100 = 10%

The percentage rent reduction is: 10% X 15% = 1.5%

Taxes must have decreased by 2.5 per cent or more for the tenants to get a rent reduction. In this case, the taxes have decreased by 10 per cent, so the tenants would receive a rent reduction.

The amount of the rent reduction is 15 per cent of the tax decrease. (see item 3 above)

The tax decrease is 10 per cent. Therefore, the rent reduction is 10 per cent x 15 per cent = 1.5 per cent.

All rental units in the rental building would receive the same  per cent rent reduction. For example, if the rent is $800., the landlord and tenant would reduce the rent by $16 to $784 in case of a large building and by $12 to $788 in case of a small building.

Municipalities must send rent reduction notices to landlords between June 1 and September 15, and to tenants between October 1 and December 15.

The automatic rent reductions do not apply to commercial, industrial or recreational properties. Some residential properties, including public housing, non-profit housing projects and co-operatives, vacation homes and some housing owned by educational institutions are also exempt.

If landlords or tenants feel the rent reduction is too high or too low, they can apply to the Landlord and Tenant Board to have the amount of the rent reduction varied.

Applications must be made to the Board by March 31 of the year following the effective date of the rent reduction. A landlord or tenant can apply if any of the following circumstances applies:

  • The landlord paid certain charges that were not included when the municipality calculated the percentage rent reduction.
  • The landlord pays more or less 15 per cent or 20 per cent (whichever factor is applicable) of the rent for property taxes.
  • The amount of the tax reduction or rent reduction in the municipality's notice is wrong.
  • The property taxes for the year under consideration increased or decreased after the notice of rent reduction was sent to landlords and tenants.

The Landlord and Tenant Board has 20 offices across Ontario and can be reached 24-hours-a-day by calling this toll free number, 1-888-332-3234. The Eastern District Office in Ottawa can be reached by fax at 613-787-4024. The Landlord and Tenant Board’s Web site offers information brochures and applications for rent reduction. The same website also offers information on the automatic rent reductions process.

Related Link

Landlord and Tenant Board

Last updated: November 12, 2014

Information for capped classes

Commercial, industrial and multi-residential properties

Change in reassessment

Annual reassessments were effectively replaced  in the province of Ontario with a four-year phase-in  program. The changes between the valuation dates of January 1, 2005 and January 1, 2008 were phased in over the taxation years 2009 to 2012. The changes between the valuation dates of January 1, 2008 and January 1, 2012 are phased in over the taxation years 2013 to 2016. Assessment decreases are recognized in the first year.
 

Limits on tax increases for 2001 and beyond

 In 2000, the Province extended the mandatory limit on reform-related property tax increases for commercial, industrial and multi-residential classes by passing Bill 140 (Continued Protection for Property Taxpayers Act, 2000) for the taxation year 2001 and beyond.

This is accomplished by limiting the reform-related property tax increases on these types of properties to a set maximum (refer to the Capping program parameters found below) based on the previous year’s annualized or CVA taxes (i.e. current value assessment times the applicable tax rates).

Please note that any annual budgetary municipal levy increases and/or decreases are applied over and above this limit. 

 

City of Ottawa capping program

Since 2006, the municipality has selected several new options made available to accelerate the progress towards CVA taxes, which is the ultimate goal of the capping program. Since 2009, the Province has made available a new municipal option, which will help municipalities in reaching the elusive goal of all property owners paying taxes at their CVA tax level. Properties that have reached CVA in the previous year or would cross-over from the clawed back category to the capped category or would exit the program and remain at CVA taxes.. Properties that coss over the capped category to the clawed back category remain subject to claw back adjustments.

Since 2009, only properties receiving capping protection in the previous year will still be eligible to a reform related increase protection over the 10 per cent limit or five per cent of the previous year's CVA. These capping adjustment credits are funded by clawing back some of the reform-related reductions within these classes as is mandated by Provincial legislation. A clawback per cent is calculated for each of the commercial, industrial, and multi-residential classes.
 

Please note that in special circumstances, the information required to do the capping analysis is not available at the time the tax bills are generated. New properties or properties experiencing a change of class or use, etc. may be subject to a recalculation of the capping adjustment. Once more information is made available for a specific property, a recalculation will be performed to establish if a capping adjustment is required and a notification and/or a revised tax bill will be issued.
 

Capping program parameters

Since 2006, Council has approved the following parameters: 
 

  • 100 per cent of CVA taxes for new construction.
  • Capping parameter to 10 per cent of the previous year's annualized taxes.
  • Capping parameter of 5 per cent of prior year CVA taxes.
  • $250 threshold within CVA taxes moves the property to its CVA tax level.
  • New exit plan for properties having reached or crossing over (clawed back to capped) the CVA tax level (such properties to thereby remain at CVA taxes in such instances).

Property assessment changes

The City now has the flexibility to make the necessary changes to correct and adjust assessment on the final billing. If all information was available, property tax bills have been modified to reflect these latest changes due to Assessment Review Board decisions, reconsiderations, etc.
 

Explanation of property tax calculations

Schedule 3, on the reverse side of your capped property tax bill, summarizes how your current taxes have been derived from previous year's annualized taxes. The Tax Cap Amount reflects either the increase up to 10 per cent applicable to your property or the retained amount of your reduction both subject to the new $250 threshold if the property is within $250 of CVA taxes. The difference between CVA taxes and the adjusted taxes represents the Tax Cap Adjustment which is your capping protection or clawback which is reflected on the tax bill summary, following the detailed tax rates and assessment calculation. See the following example:

 

COMMERCIAL EXAMPLE:

CAPPING

 

CLAWBACK

(for illustrative purposes only)

 

$250

 

$250

 

10% CAP

$250

60%

$250

Previous Year's  CVA Taxes

$ 8,000

$ 2,000

$ 8,000

$ 2,000

Previous Year's Capping Protection/Clawback

-$ 2,000

-$ 300

$ 700

$ 300

Previous Year's Adjusted Taxes

$ 6,000

$ 1,700

$ 8,700

$ 2,300

Current Year Tax Cap Amount

$ 600

$ 170

-$ 280

-$ 120

Additional if within $250 CVA

 

$ 130

 

-$ 180

Taxes Before Levy Increase

$ 6,600

$2,000

$ 8,420

$ 2,000

Budgetary Levy Increase 5.0%

$ 400

$ 100

$ 400

$ 100

Current Year's Adjusted Taxes

$ 7,000

$ 2,100

$ 8,820

$ 2,100

Current Year's Capping Protection/Clawback

$ 1,400

$ ---

-$ 420

$ ---

Current Year's CVA Taxes

$ 8,400

$ 2,100

 

$ 8,400

$ 2,100

Special Notice

Rebates for vacant commercial and industrial buildings only.

Property tax relief on qualifying vacant commercial and industrial buildings for the current year, will be provided to property owners through rebates issued by the municipality.
 

Ratepayers for any given tax year may choose to apply for the rebate in two stages, an interim application after June 30 of the tax year in question, and a final or full year application on or before the last day of February of the following year.

For Applications

Tel: 613-580-2444
TTY: 613-580-2401
E-mail: revenue@ottawa.ca
Mail: City of Ottawa, Revenue Branch, Commercial/Industrial Vacancy Rebates, 100 Constellation Drive, 4th Floor East, Ottawa ON, K2G 6J8


Last updated: December 31 , 2015

Commercial and industrial tax rebates

This rebate program provides tax relief to property owners who have vacancies in commercial and industrial buildings. It began in 2001, when Provincial legislation was passed stating cities must provide tax reduction for vacant units in commercial and industrial buildings by issuing rebates rather than lower tax rates.

To qualify for a rebate, the vacancy duration must be at least 90 consecutive days (89 days if entire month of February is involved). Owners must submit a Commercial/Industrial Vacancy Rebate application for each year that a building, or a portion of a building, is vacant for at least 90 consecutive days.

Vacancy Rebate Program Review

In the Fall of 2016, the Province announced its intent to provide municipalities with increased flexibility to manage business property taxes, including the Vacant Rebate Tax Program.  In response to municipal requests, the Province is now moving forward with vacancy rebate program changes which are intended to enable municipalities to better tailor the programs to reflect community needs and circumstances. 

Ottawa's Metrics

  • 318,000 property tax rolls
  • 11,400 properties in the industrial and commercial classes
  • 100% of tax payers contribute to the VRP fund (all tax classes, including residential)
  • 900 – 1,100 applications annually, less than 9.6% in commercial and industrial classes benefit from VRP
  • 30% - 40% are repeat applicants.

The City of Ottawa has undertaken a Vacancy Rebate Program Review which included researching plans of other Ontario municipalities, conducting a series of in-person consultations with business stakeholders and offering an online survey.  The purpose of the consultations was to receive and review feedback from the business stakeholders on the proposed program options and to identify impacts or unintended consequences of proposed changes on the business community.  

Comments may also be submitted via email to vrpr-prpv@ottawa.ca

 

Options for changes to the VRP:

  1. Elimination of the Vacancy Rebate program - Eliminate the program completely.
  2. Phase-out of the Vacancy Rebate program - Eliminate the program over three years with a declining benefit each year.
  3. Declining Benefit - the program continues, but individual properties would see a year-over-year decline of the rebate, ending at a zero percent benefit.

The VRP Review has been guided by the following principles which were shared with those consulted:

  • All costs of the VRP, as well as the rebates, be borne by the commercial and industrial classes.
  • Any changes must not be administratively burdensome for the City.
  • The program cannot remain the same as it is today.

To date, feedback has been consistent related to the aggressive timeline.  The City listened, and is responding by separating the VRP Review report from the April 4th Tax Policy report and moving it to a stand-alone report to the Finance and Economic Development Committee (FEDCO) in May, 2017.  

Further, the business community has been invited to document their “self-funding” proposal for the City’s consideration by March 29, 2017.  BOMA has agreed to co-ordinate this submission with the local business community and various associations.  The City has requested they address tenants’ concerns as self-funding will result in a tax increase to the Industrial and Commercial tax classes.

How to submit an application

  1. Download the Application for Rebate of Property Taxes for Vacancies in Commercial and Industrial Buildings form [PDF - 491 Kb]. Read all instructions carefully before filling in the requested information on-screen. Then, print a copy, sign and return the form to our office along with any supporting documentation. Should you prefer, you can also print a copy of the form, fill in the information by hand, sign and return the form to our office.
     
  2. Property owners or their authorized representative must complete and sign the application, ensuring the questionnaire on pages 3 and 4 is duly filled. If submitted by the owner's representative, a letter of authorization signed by the owner must accompany the returned form.
     
  3. Two options are available for submitting rebate applications:
    • one application for vacancies that occurred during the first six months of the year and a second application for vacancies that occurred during the last six months of the year or
    • one application to cover all vacancies that occurred on that property during the entire tax year.
       
  4. The deadline to submit an application for a tax year is February 28 of the following year. 
     
  5. Any additional documentation should be submitted (copies only as originals will not be returned) such as expired leases or media advertisements, utility records or any other material, that would substantiate the application.
     
  6. Applications will be monitored and are subject to verification through site inspections by the City of Ottawa or by further requests for information. Please keep a copy of your application, as the City will retain the original.
     
  7. Return the completed application to: City of Ottawa, Revenue Division, 100 Constellation Drive, 4th Floor East, Ottawa, ON K2G 6J8, Attention: Commercial/Industrial Vacancy Rebates

The rebate program is governed by Section 364 of the Municipal Act and Ontario Regulation 325/01 as amended to 300/03. Copies of legislation and regulations may be viewed on the Government of Ontario's "e-laws" Web site.

For more Information contact the City of Ottawa by telephone at 613-580-2444 (calls may be recorded) (TTY 613-580-2401), or by e-mail at revenue@ottawa.ca

Last updated: March 15, 2011

Registered charitable organizations

Legislation passed by the Province of Ontario requires municipalities to provide eligible charities with rebates of at least 40 per cent of their property taxes for the space they occupy.

For a charity to be eligible for this rebate it must have a valid registration number issued by Canada Revenue Agency, and occupy a property that is in a commercial or industrial tax class.

On applications made by charities between January 1 of a particular taxation year and the last day of February of the following year, municipalities are required to issue half of the rebate to a charity within 60 days after the receipt of the application and property data confirmation. The balance is payable within 120 days of the receipt of the application, with adjustments (if any) being made after the issuance of final tax bills for the year.

Registered charities must apply every year.

Complete details are included with the application, which is available via the link below, or by calling the City of Ottawa Revenue Branch at 613-580-2444, (Calls may be recorded) (TTY 613-580-2401), Monday to Friday 8 am to 4:30 pm (September to May) and from 8 am to 4 pm (June to August), by fax at 613-580-2457, by e-mail at charitablerebates@ottawa.ca.

To complete your Tax Relief Application Form:

  • Download the 2016 Tax Relief Application Form [PDF - 556 KB] (last day of February 2017 deadline for filing), fill in the requested information on-screen, then print and sign the form. Should you prefer, you could also print a copy of the form, fill in the information by hand and sign the form.

Return your completed application to:

City of Ottawa
Revenue Branch
100 Constellation Drive, 4th Floor East
Ottawa, ON K2G 6J8
Attention: charitablerebates@ottawa.ca