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Ottawa helps tenants and landlords on property taxes

Posted in Association News, Legal, Tax Law

Ottawa helps tenants and landlords on property taxes


News Release September 23 , 2013

Ottawa helps tenants and landlords on property taxes

As EOLO reported in March, Ottawa residential properties (including single family homes) saw total assessment increases averaging 26%. Multi-residential properties (“multi-res” of more than six units on a single roll number) went up an average of 52%. City Council could have allowed that value shift to push up taxes for properties in the multi-res class, even though the tax rate on tenants is 1.7 times what it is on homeowners (i.e. 70% higher).
EOLO has been addressing the tax inequities with Ottawa City Council with some success for more than 10 years. Thanks to our arguments, City Council acted in April 2013 to reduce the multi-res tax ratio from 1.7 to about 1.6 in order to eliminate the 2013 tax shift. That has spared residential properties from city-wide tax increases. The average landlord does not have to pay higher taxes, and then seek to collect them in tenants’ rents.
Tenants and landlords should be grateful to Mayor Jim Watson, and all the City Councillors, for addressing the property tax situation for 2013. However, there are substantial numbers of properties which have seen increases or decreases on an individual basis.
If the property taxes go up on a property by more than 1.2% in 2013, then a landlord can apply for an above-guideline rent increase in 2014. The threshold varies with the rent increase guideline.
If the property taxes go down by more than 2.5% in 2013 compared to 2012, then a landlord is required to reduce the rent at December 31, 2013. The City of Ottawa is required to mail out notices of rent reduction to the multi-res properties which see such tax decreases. There are 250 such properties, with a total of 13,000 rental units.
The notices to landlords will go out in September. Landlords should review those notices, and decide whether to accept the rent reduction percentage, or to apply to the Landlord and Tenant Board to vary (i.e. reduce) the rent reduction percentage. See the article below.

The notices to tenants will go out later, likely in November, telling tenants the percentage rent reduction that is required unless the landlord applies to vary it. The City notices do not tell tenants the new rent they need to pay as of January 1, 2014. EOLO will make available sample notices—which landlords can use to inform tenants about the rent reduction and tell them the new amount of rent they need to pay. That should make matters less confusing for your tenants and your staff people.
Besides the rent reductions required by provincial law, EOLO’s major members have agreed to reduce rents if their property taxes have gone down by a percentage less than 2.5%, provided the average rent reduction in a building is more than one dollar.
We have always explained to City Council that it is the tenants who ultimately pay the property taxes, and that is why City Council has addressed the multi-res property tax inequity. These voluntary rent reductions are a way of making sure more people, both tenants and Councillors, understand the key fact that tenants pay the property taxes.
Absent further positive moves by City Council in 2014, 2015 and 2016, property taxes on residential rental properties will be going up by substantially more than the city budget needs in those years. EOLO addresses the political side of that major issue.

For more information on the property tax situation, check the EOLO website. For assistance with property tax concerns, contact David Lyman, EOLO Vice-President at 613-235-9792 or at 613-235-0101.