Two Properties, One Tax Bill: Separating Property Taxes After an Ontario Severance

Your property has been severed into two parcels, but the municipal tax bill still covers both. Perhaps you are keeping one lot and selling the other, or the properties already belong to different owners.

How do you get separate tax bills? and what happens to the taxes in the meantime?

The process involves both the Municipal Property Assessment Corporation (MPAC) and your municipality. MPAC updates the assessment records, while the municipality handles the tax accounts and billing.

Why does the tax bill still show both properties?

Completing a severance and updating the property tax records are separate steps.

MPAC’s published process begins with notification from the land registry office that a transfer implementing the severance has been registered. MPAC then assigns new or updated assessment roll numbers and notifies the municipality. An updated Property Assessment Notice is issued for the next taxation year.

That means a severance approval does not necessarily result in two separate tax bills immediately. The assessment and billing records may still need to catch up.

You can read more about the process on MPAC’s Merging and Severing Properties page.

Start with the municipality’s property tax department

Contact the tax department for the municipality where the properties are located. Explain that the severance has been completed but both parcels remain on the same tax bill.

Ask:

• Has MPAC provided the updated assessment information?
• Have separate assessment roll numbers and tax accounts been established?
• Is anything further required from the owner or lawyer?
• When will separate bills begin?
• How should the existing bill and payments be handled?

Request written confirmation, particularly if one of the properties is being sold.

Follow up with MPAC

If the municipality is waiting for MPAC, contact MPAC to confirm that it has received the information needed to process the severance.

For the initial inquiry, we recommend having the following available:

• The current tax bill and assessment roll number.
• The registered transfer implementing the severance.
• The severance consent or certificate.
• The registered reference plan.
• The PINs and legal descriptions for both parcels.
• The owners’ names and mailing addresses.

The documents required will depend on what has already been processed. Your lawyer can help identify the relevant registration documents.

Use MPAC’s contact page to submit an inquiry and supporting documents.

What happens to the existing combined tax bill?

Creating separate accounts for future billing does not necessarily resolve the taxes already billed under the original account.

A process called tax apportionment may be required to allocate outstanding taxes between the parcels.

For Ontario municipalities outside Toronto, section 356 of the Municipal Act, 2001 allows an owner to apply to the municipal treasurer to divide land assessed in one block into legally conveyable parcels and apportion unpaid taxes. The provision covers the year of the application and the two preceding years, subject to statutory requirements and restrictions. It also addresses the allocation of partial payments.

See Ontario’s Municipal Act, 2001—section 356.

Toronto has a corresponding tax apportionment process under section 322 of the City of Toronto Act, 2006. See the City’s Property Tax Bill Types page under “Apportionment Property Tax Bill.”

The treatment of an account that has already been paid should also be confirmed with the municipality. For example, Mississauga states that it only recalculates taxes through this process where unpaid taxes remain on the original property. Its apportionment guide explains its local procedure.

Can we just split the bill in half?

Do not assume that each parcel owes 50% simply because one property became two.

Under section 356, the starting point is the parcels’ relative values, although the legislation permits a different allocation in special circumstances. A parcel containing a house may have a very different value from an adjoining vacant lot—even if the lots are the same size.

What if one property is being sold?

Tell your real estate lawyer early that the tax bill still covers both properties.

Before closing, the lawyer should review the combined account, payments already made, the status of the assessment split, and the agreement’s treatment of property taxes. Depending on the circumstances, the parties may need an agreed adjustment, an undertaking to readjust once the allocation is available, or a suitable holdback.

A private agreement between the buyer and seller does not itself update the municipality’s tax records.

While the split is pending, obtain payment instructions from the tax department. Do not assume that requesting separate bills suspends payment deadlines or permits you to pay only an estimated share.

Buying or selling a severed property? Get the tax details sorted early.

A combined tax bill should be addressed before it becomes a last-minute closing issue.

At Rabideau Law, we help buyers and sellers identify outstanding property tax issues, understand what remains to be completed, and put appropriate closing arrangements in place. From reviewing title to coordinating tax adjustments, our team helps keep your transaction moving.

Contact Rabideau Law today to discuss your purchase, sale, or severed-property transaction.