Income properties: how MPAC values them and how to challenge the assessment

House, plex or multi-residential: where your building fits

For MPAC, a multi-residential building contains "seven or more self-contained residential units." Each self-contained unit must have a kitchen, a bathroom and a separate entrance. MPAC names four building types: a converted house with seven or more units (bachelorette), row housing under single ownership, low-rise buildings (under five storeys) and medium or high-rise buildings. The multi-residential property codes are 340, 341, 352, 361 and 374.

Below that threshold, the building stays residential. MPAC lists duplexes and "apartment buildings with six or fewer units" as residential (codes 332 to 336). They are valued by direct comparison, like a house, and a reconsideration is still required before an appeal. The guides on evidence and the record checklist apply: check the number of units on file above all.

A mixed-use building can carry more than one class. MPAC's example: an apartment upstairs classified residential and a store on the main floor classified commercial.

The income approach, as MPAC describes it

MPAC writes: "We use the income approach to value multi-residential properties." It reviews potential rental income and other potential income (parking, laundry), then runs market analyses to set an allowance for vacancy and collection loss, normalized operating expenses and capitalization rates.

Its 2016 methodology guide sets out direct capitalization in five steps: potential gross income, effective gross income, a normalized expense ratio, net operating income, then capitalizing that income into value. The key point: potential gross income assumes the building is "at full occupation and at market rents as of the valuation date of January 1, 2016." Typical market rents apply to vacant units, and non-market leases are adjusted.

In practice, your actual rents do not set the value on their own. They help show what market rents, vacancy and expenses looked like around January 1, 2016.

The Property Income and Expense Return: a yearly obligation

Every year, MPAC asks income-producing properties for their income, expenses and rent roll through the Property Income and Expense Return (PIER). It says it sends "more than 35,000 request letters" a year. In 2026, letters went out on May 27 and the deadline was July 22, 2026. Responding is mandatory under section 11 of the Assessment Act. The 2026 multi-residential letter asks for:

• an income and expense report for the most recently completed fiscal year;
• a summary of all vacant areas and income lost to vacancy and collection loss;
• additional charged parking spaces;
• the current rent roll, including non-residential tenants;
• information for the new affordable rental housing subclass, if eligible.

Not responding is costly

Section 13 of the Act makes failing to provide the information an offence: a fine of up to $1,000, plus $100 for each day of default. Knowingly stating something false can cost up to $2,000. Above all, MPAC reminds owners that without the requested information, "the burden of proof will shift from MPAC to you" at the ARB (s. 40 (18)).

Practical rules from MPAC's 2026 FAQ: one submission per roll number; income and expenses over a full 12-month fiscal year; the rent roll as of the date of the letter; no online changes after you submit, so you must email MPAC. The information is protected: MPAC may not disclose it without authorization (s. 53).

Challenging it: optional reconsideration, direct appeal, general proceeding

A prior reconsideration is only required for the residential, farm and managed forests classes (Assessment Act, s. 40 (3)). A multi-residential building can therefore ask MPAC for a free reconsideration, or go straight to the Assessment Review Board: by March 31 (s. 40 (6)), or within 120 days of the issue date on a change notice (s. 40 (8)). If you file a reconsideration, wait for MPAC's decision before appealing.

The ARB fee is $318 per roll number for multi-residential, commercial, industrial and other properties, with $10 off when you e-File. The ARB sets fees by Property Code, not tax classification. According to the ARB, these appeals follow the general proceeding: disclosure, statement of issues, a mandatory meeting, a settlement conference, then a hearing. Documents not filed by the set date are not admitted. See cost and savings and after you appeal.

Evidence for an income property

Evidence follows the method. For the period closest to January 1, 2016, gather:

• The rent roll: type of each unit (bachelor, one-bedroom, two-bedroom), rent, services included.
• Leases, including terms that move a rent away from market (free months, services provided).
• Vacancy and bad debt, unit by unit.
• Income and expense statements, separating general repairs from capital expenditures, a distinction MPAC explains in its FAQ.
• Other income: parking, laundry, storage lockers.
• Rents at comparable buildings nearby, which MPAC uses when a building's own rents do not reflect the market.

Two points to know, and the role of an appraiser

Affordable housing. Since 2026, an optional affordable rental housing subclass exists for multi-residential properties. If the municipality adopts it by by-law, it may reduce the municipal tax rate for eligible units "by up to 35%." According to MPAC, rent-controlled units are not eligible. The information goes to MPAC through the PIER.

Professional appraiser. The higher the value, the higher the stakes, and the ARB's general proceeding provides for expert reports. The Appraisal Institute of Canada (AIC) says the AACI designation qualifies appraisers for "all property types." Ask for a report using the income approach, as of January 1, 2016. See Payotte's appraiser directory, and to compare the assessment with today's market, municipal assessment vs market value. Back to the Ontario guide.

Frequently asked questions