How municipal taxes are calculated

Last updated January 18, 2024
Reading time: 2 min

Property taxes are the city’s main source of revenue to fund its activities. The amount of taxes you pay is based on the value of your home.

In general, taxes are calculated by multiplying:

  • The tax base
  • The tax rate

Tax base

The tax base is the value that is used each year to calculate most of the taxes that your account comprises. It represents the value of your building that appears on the property assessment roll, to which the city can choose to apply an averaging measure.

Averaging measure

In general, a new property assessment roll is tabled every three years and can result in a rise in property values.

To reduce the impacts of a higher property value on your taxes, we average the difference between your property value on the old roll and the new roll over a three-year period.

One-third of the difference is added to your old value each year. This is the tax base. For example, if your building was worth $500,000 on the 2020-2022 roll and is assessed at $620,000 on the 2023-2025 roll, your tax base is as follows:

  • 2022: $500,000 
  • 2023: $540,000 
  • 2024: $580,000 
  • 2025: $620,000 

The averaging measure also applies if your property value decreased from the previous roll.

In some cases, the averaging measure is not used, such as buildings that were built before the assessment roll came into force. As well, averaging is lost when certain property modifications, such as subdividing your home, are made.

Tax rates

Tax rates are determined each year according to the value of all buildings and projected revenue to offer city services. Tax rates apply to each $100 of the tax base.

The following factors can influence tax rates:

  • The category to which your building belongs 
  • Your borough

Building categories and variable rates

Some taxes, such as the general property tax, have variable rates. For these taxes, the rate depends on the category of your building. In Montréal, there are four building categories:

  • Residual buildings:
    • Residential buildings with five or fewer dwellings 
    • Unused vacant lots
  • Residential buildings with six or more dwellings 
  • Non-residential buildings, including mixed-use buildings
  • Vacant lots that are being used

Mixed-use buildings

A mixed-use building has both residential and non-residential components. The class attributed to the building defines the proportion of each of these parts.

In this case, each part is taxed according to the rates that apply to its category.

Non-residential buildings and differentiated tax rates

Non-residential buildings, including mixed-use buildings, are subject to differentiated rates for the general real estate tax, the contribution to the Autorité régionale de transport métropolitain (ARTM) and the tax concerning former cities’ debts.

Different tax rates are charged depending on the building’s value: The first rate applies to the value of your building up to $900,000, and the second, to its value in excess of $900,000.

For example, for a residential building worth $1,000,000, the general real estate tax would be:

  • $900,000 x the non-residential rate 1
  • $100,000 x the non-residential rate 2

Learn how to calculate the non-residential portion of a tax account

Borough taxes

Boroughs have two types of taxes: A services tax and an investment tax. Each borough determines the current rates that are in force within its limits.

Borough taxes have uniform rates. Uniform rates are the same for all building categories.