If you own a home, you know the feeling. You open the mailbox, spot an envelope from the City or Municipality, and immediately feel a twinge of anxiety.
Is it a bill? Is it a notice? Did I forget to shovel the sidewalk?
This time of year, it is often your Property Tax Assessment Notice. And if you are like most homeowners, you look at the dollar figure listed next to your address and think one of two things:
- “Wow, my house is worth that much? I’m rich!”
- “Wait, they think my house is worth that much? My taxes are going to skyrocket!”
Before you celebrate your newfound wealth or panic about your monthly budget, it is important to understand what that number actually means—and how it impacts your mortgage payment in 2026.
1. Assessment Value is NOT Market Value
This is the most common misconception in real estate.
- Market Value is what a buyer is willing to write a cheque for today. It is influenced by emotion, supply and demand, bidding wars, and the recent sale of the house down the street.
- Assessment Value is a calculated figure used by the local government solely to determine your share of the city’s budget.
Assessments are often based on data that is 1 to 2 years old (lagging data). If the market has spiked or dropped recently, your assessment likely won’t reflect the true selling price of your home.
The Golden Rule: Never use your tax assessment to price your home for sale. It is almost always lower than true market value.
2. The “Mill Rate” Math
Just because your assessment went up doesn’t automatically mean your taxes will go up by the same percentage.
Municipalities determine their budget for the year (snow clearing, police, libraries, etc.). They then set a “Mill Rate” to generate that money.
- If everyone’s property value goes up by 10%, the city might lower the mill rate so that they collect the same amount of total money.
- However, if your property value went up by 20% while your neighbors only went up by 5%, your slice of the pie gets bigger, and your tax bill will likely increase.
(Note for Manitobans: Remember that we also have “Portioned Assessment,” meaning you are taxed on 45% of the assessed value, not the full amount. This adds another layer to the math!)
3. The Mortgage Payment Shock (The “Escrow” Effect)
This is where the rubber meets the road for your monthly budget.
If you pay your property taxes through your mortgage lender (which most high-ratio borrowers do), your lender collects a portion of your annual tax bill every month and puts it into a holding account (often called a Tax Account or Escrow Account).
When your property taxes increase, two things happen to your mortgage payment:
- The Future Adjustment: The lender increases your monthly payment to cover the higher cost for next year.
- The Shortfall Catch-Up: Because the tax hike often happens mid-year, the lender may have under-collected for the previous months. Your account is now in the negative. They will increase your payment further to pay back that shortage.
This is why you might receive a letter from your lender in December or January stating your mortgage payment is jumping by $50 or $100 a month, even though your interest rate hasn’t changed.
4. Can You Fight It?
Yes. If you believe the City has made a genuine error—for example, they assessed you as having a finished basement when you actually have concrete floors and studs—you can appeal the assessment.
However, simply feeling that “taxes are too high” is usually not grounds for a successful appeal. You must prove that the assessment is inaccurate compared to similar homes in your neighborhood.
The Bottom Line
Property taxes are the one housing cost that never goes away, even after your mortgage is paid in full.
As we head into 2026, keep an eye on your mail. If you receive a tax notification and you are confused about how it affects your monthly mortgage payments, reach out to me. We can review your mortgage statement together to ensure there are no surprises in the New Year.
