Some Ottawa renters living in older apartment buildings could save more than $150 a year on rent. as the city looks at lowering the property tax rate for multi-residential buildings built before 2001.
A report for the finance and corporate services committee meeting on Tuesday recommends the City of Ottawa begin a four-year reduction in the Multi-Residential tax ratio from 1.4 to 1.0.
The Multi-Residential Tax class is for properties built prior to 2001 and has a tax ratio of 1.4094. The New Multi-Residential class for properties built after 2001 has a ratio of 1.000.
The tax ratio is the proportion by which a class is taxed at compared to the residential class tax rate, meaning the tax for an older multi-residential building is 1.4 times the rate of a residential property.
Last year, Coun. Shawn Menard directed staff to explore the feasibility of a proactive ratio reduction for the multi-residential ratio to 1.0 over three to five years.
Staff are recommending the city reduce the Multi-Residential tax ratio to 1.3 in 2025 and then by 0.1 each year until ratio parity of 1.00 is achieved or until a provincewide reassessment occurs. The tax reduction would result in a $16 a month decrease for someone paying $2,000 in rent.
“By lowering the Multi-Residential tax ratio to 1.3 in 2025, a multi-residential property would experience a 7.4 per cent decrease or a 4.5 per cent decrease after the approved 2025 budgetary increase, which means an automatic rent reduction,” staff say.
“A 4.5 per cent reduction in property taxes in 2025 equates to a 0.89 per cent forced rent reduction in 2026. For example, a person paying $2,000 per month in rent will see an estimated $16 automatic rent reduction per month ($192 per year) in 2026.”
Lowering the tax ratio by 0.1 per cent would reduce property tax revenue for the city by $8.8 million, which would be off-set by a 0.4 per cent tax increase for all other property tax classes.
“The average residential property assessed at $415,000 would experience a tax increase of $19 per year,” staff say.
The report says if the City of Ottawa immediately reduced the Multi-Residential radio for buildings built before 2001 from 1.409 to 1 per cent, it would cause an immediate 1.6 per cent tax increase for all other classes. The average residential property assessed at $415,000 would experience a tax increase of $69 per year, staff say.
For 2025, the city says the New Multi-Residential Class saw revenue growth of $11 million due to 4,085 new rental apartment units.
In 2024, the city received $116 million from the Multi-Residential tax class and $44.37 million from the New Multi-Residential class.
The report on the 2025 tax policy also recommends the city discontinue the optional Parking Lot and Vacant Land tax class and eliminate the 35 per cent discount for Industrial Vacant Land properties.
“This would mean that parking lots and commercial vacant land would pay the commercial rate and industrial vacant land properties would pay the industrial rate,” staff say. “This approach lines up with the residential and multi-residential vacant land which pay the same tax rate as properties within tier respective classes.”
Staff say eliminating the Parking tax class and the Vacant Land discounts will increase the taxes paid to the city by $10.7 million.
“The increase would be offset by a 1.2 per cent reduction for properties in all other 20 commercial tax classes, and 8.5 per cent reduction for properties in all other industrial tax classes and a 0.1 per cent reduction for properties in all other tax classes,” staff said, adding the average home with an assessed value of $415,000 would see a $4 decrease in municipal taxes.
Ottawa currently has 1,535 properties in the Parking Lot and Vacant Land optional tax classes, including 810 properties described as parking lots, parking garages or parking for commercial/industrial condominiums.
Property taxation is the primary way that municipalities raise funds to provide City services. Ontario gives municipalities the authority to apply differential tax rates to different property classes.
