I have vacant space - is there anything that can be done about my property tax

For years (decades really) Ontario has had a program for reducing the taxes paid by business owners on their vacant buildings. It has changed from time to time, but the gist was the same: vacant, unused space should result in some sort of credit to the owner. (Interestingly, at one point you had to file in advance - the owner was expected to know what the vacancy situation would be in the next year.)

Now though, the vacant unit rebate program is being phased out. For some cities, it is already gone. For others, it is going away. (Niagara region municipalities, Kingston, Windsor, and others still have a rebate program). But in the many city’s which have phased out the program, we have the question - can anything be done?

In the case of minor vacancy, probably not much. It was fairly common for factories, for example, to have a small pocket here or there, and they would apply for, and receive, a rebate for such space. It was usually minor, but appreciated. The dollars involved probably didn’t justify the work that went into it, between the taxpayer, the assessor and the town, but it was the way things were done. For these little pockets of vacant space, there is probably not much that can be done to reduce the taxes. (There may be other issues on the property though - have your assessment reviewed!)

But what about a large swath of permanent vacancy? Think of a factory with two major production lines. Due to permanent changes, one of the two lines will never run again. It just sits there, taking up space. Big dead machines sit in the way, and there seems to be no reasonable way to re-purpose the space. In that case, you likely have something called “functional obsolescence.”

Sometimes even after the machines are pulled out, the building is still obsolete.

Sometimes even after the machines are pulled out, the building is still obsolete.

Ontario property tax assessments are based on an estimate of value. Value to both the owner and a purchaser. In a case like this, the dead space is of no use to the owner, and is likely valueless to any conceivable purchaser. The value of the property needs to be reduced to reflect this.

So think - when is the last time an assessor toured your property? If you have space which is permanently out of service, or even which has significantly changed its use, it is quite possible that your property assessment (and thus property taxes) are too high.

Getting this reduction is somewhat more complicated than the old vacancy rebate process. You have to convince the assessor that your property is partially obsolete, and needs a reduction. Even once that is established, then there is the question of how obsolete is it? Major assessment appeals have been fought over the right way to calculate such obsolescence.

On the plus side - you don’t have to reapply every year. These sorts of adjustments should be checked every cycle (the next cycle covers the 2021-2024 tax years, and the values come out next year). But generally, once the assessor is convinced, your reduction should stay put.