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Property tax appraisals in Canada: a guide
When a property needs a tax appraisal, what each type is for, and how fair market value is determined for the Canada Revenue Agency.
Three groups of tax appraisals
Property tax appraisals in Canada generally fall into three groups, depending on the legal trigger. Which one applies to you depends on your situation, so confirm with your accountant or tax lawyer.
CRA tax compliance valuations
Fair market value on a specific date for capital gains, change of use, gifts to family, death, residency changes and non-resident sales.
Estate and provincial tax valuations
Probate (estate administration tax in Ontario) and the 21-year deemed disposition for trusts.
Municipal assessment valuations
Appeals of your yearly municipal property assessment, such as MPAC and the Assessment Review Board in Ontario.
This page is general information, not tax or legal advice. Tax rules change and depend on your situation, so confirm with your accountant or tax lawyer. We provide the property valuation only.
Types of tax appraisals and when you need them
| Appraisal | When it applies | What we establish |
|---|---|---|
| Capital gains | When you sell, gift or otherwise dispose of a property, the Canada Revenue Agency (CRA) generally looks at its fair market value to work out your capital gain. | A documented fair market value to support capital gains and your adjusted cost base. |
| Change of use | Converting your home into a rental property, or a rental into your home, can be treated as a deemed disposition and reacquisition at fair market value. | Fair market value on the date a home becomes a rental, or a rental becomes your home. |
| Gifts and family transfers | When you sell or gift a property to a family member or another non-arm’s length party, the CRA can treat the transaction as happening at fair market value, even if the price paid was lower. | Fair market value for gifts and sales to family or related parties. |
| Date of death | On death, the CRA generally treats a person as having sold their capital property at fair market value immediately before death, unless it passes to a spouse or common-law partner under a rollover. | Fair market value as of the date of death for the final tax return and the estate. |
| Probate and estate tax | In Ontario, estate administration tax is based on the value of the estate’s assets when a certificate of appointment is applied for. | Real estate values for estate administration tax and estate lawyers. |
| Trust 21-year rule | Most personal trusts are treated as having sold their capital property at fair market value every 21 years, which is a deemed disposition for tax purposes. | Fair market value on a trust’s 21-year anniversary. |
| Residency change | Becoming or ceasing to be a Canadian resident for tax purposes can affect the cost of certain property. | Value on the date you become or stop being a Canadian tax resident. |
| Non-resident sales | When a non-resident sells Canadian real estate, the buyer may need to hold back tax unless the CRA issues a certificate of compliance. | Value support for non-residents selling Canadian real estate. |
| Property tax appeals | Your municipal property assessment is separate from CRA income tax. | Market value evidence for MPAC reviews and Assessment Review Board appeals. |
| CCA recapture | When you sell a rental or commercial property on which you claimed capital cost allowance (CCA), the CRA treats depreciation recapture differently from a capital gain. | Land and building split for CCA recapture and terminal loss calculations. |
| GST/HST valuations | Self-built homes, substantially renovated homes and some conversions can bring GST/HST obligations or rebates that depend on fair market value. | Fair market value for GST/HST on new homes, self-builds and conversions. |
| Charitable donations | When you donate land or a property to a qualified charity, the value used for your donation receipt is based on fair market value, and the CRA can review it. | Fair market value for donated land and ecological gifts. |
| Inherited property | When you inherit a property, your cost for tax purposes is generally its fair market value on the date of death, unless it passes through a spousal rollover. | Document your cost base on an inherited property before you sell. |
| Transfers to a corporation | When you transfer property to a corporation, the amount you elect is generally set within fair market value limits. | Fair market value for property moved into a corporation. |
| CRA review support | If the CRA questions the value you reported for a property, an independent appraisal can support your position. | A valuation report to support the value you reported if the CRA asks. |
| Cottages and rentals | Cottages and rental properties often carry large unrealized gains, and the CRA taxes them when they are sold, gifted or pass on death. | Fair market value for cottages and rentals when sold, gifted or passed on. |
Valuation methods
Appraisers use one or more of three standard methods.
Direct comparison approach
The standard for houses, condos, cottages and vacant land. We compare your property with recent nearby sales.
Income approach
Used for rental and commercial property. We consider the income the property earns and market rates of return.
Cost approach
Used mainly for new construction and special-purpose buildings. We estimate land value plus the cost to replace the building, less depreciation.
Common questions
What types of property tax appraisals are there in Canada?
They fall into three groups: CRA tax compliance valuations such as capital gains and deemed dispositions, estate and provincial tax valuations such as probate and trust 21-year valuations, and municipal property assessment appeals. There are also special valuations such as CCA recapture, GST/HST and charitable donations.
Is a municipal property assessment the same as a CRA valuation?
No. A municipal assessment such as one from MPAC in Ontario is used for local property tax. CRA valuations are used for income tax and capital gains.
Where we work
City of Toronto
Peel Region
York Region
Halton Region
Durham Region
Surrounding Areas
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