Does Finishing a Basement Increase Your Property Taxes? What MPAC Does After a Permit
Updated · 6 min read · By Gilbert Brothers
In this guide
The short answer
Finishing a basement can raise your property taxes in Ontario. MPAC, the corporation that assesses every Ontario property, says it updates a property's value to reflect completed work after a building permit, and your municipality then issues a supplementary tax bill. A small increase is added at year-end and takes effect the following tax year instead. This page explains the steps and dates and gives no estimate, because any change depends on what MPAC decides your property is worth and on the City's tax rate. Rules differ by property and change; confirm your own case with MPAC or the City.
Who decides what
MPAC (the Municipal Property Assessment Corporation) sets each property's assessed value and classification. The City of Peterborough sets its tax rate each year and sends the bill; the Province sets the education rate. The City's property tax page gives the formula: assessed value multiplied by the combined municipal and education rates. MPAC and the Province both say an assessment notice is not a tax bill (MPAC, Ontario.ca).
From permit to tax bill, in order
The path is MPAC's; the Peterborough details are the City's.
You take out the permit
The City lists finishing a basement among the projects that need one; see what the City asks for. Its Building Services page warns that "additions, new construction or changes to occupancy may result in changes to property valuation."
The City tells MPAC
MPAC says that when you update your property after getting a permit, your municipality notifies MPAC. A local MPAC expert may contact you or visit. MPAC lists building permits, architectural plans, digital imagery and in-person inspections among its sources.
MPAC updates the value and mails a notice
MPAC says it updates the value to reflect the work completed and notifies you and your municipality. You receive a Property Assessment Change Notice, which MPAC sends each month from April to November.
The City issues a supplementary bill
The City says supplemental notices follow only after MPAC gives it a new assessment. They come in addition to your interim and final bills, in the second half of the year, and are not part of a pre-authorized payment plan. MPAC says the supplementary tax is the supplementary assessment multiplied by the tax rate, prorated by the days the building has been complete or occupied.
MPAC sends a Property Assessment Notice in November
It shows the updated assessed value of your entire property. The City says the following year's interim and final bills use the new total.
When a supplementary bill applies
MPAC's page on supplementary and omitted assessments says it will only issue one to reflect a change in value "if the value of a property increases by 5% of its current property assessment, or by $10,000 or more." Below that, MPAC adds the increase to the municipality's roll (its list of assessed values) as a year-end adjustment for the following taxation year.
The City says MPAC can give it a new assessment for the current year and up to two years before, so one change could produce up to three tax bills. Ask the City how yours would be billed.
Which value MPAC uses: January 1, 2016
Ontario values every property as if it sold on one fixed date, the valuation date. The Province's page says it is "currently January 1, 2016" (Ontario.ca, updated July 29, 2026).
MPAC's Homeowners' Hub says the Ontario Government usually sets a new valuation date every four years, and MPAC then reassesses every property on it. MPAC's Assessment Cycle page says the Government postponed the 2020 Assessment Update because of COVID-19. On August 16, 2023 it filed a regulation extending the postponement "through the end of the 2021-2024 assessment cycle." Assessments for the 2026 property tax year, the page adds, "will continue to be based on fully phased-in January 1, 2016 current values."
For a renovation, MPAC says the 2026 assessment is what the property would have sold for on January 1, 2016, "in its current state and condition, including any major changes since then." So the finished work is measured against the market on that date.
Those statements cover the 2026 tax year. The Province's 2025 Ontario Economic Outlook and Fiscal Review (its fall statement, November 6, 2025) and 2026 Budget (March 26, 2026) each have a section on the property assessment system, and neither names a date for a province-wide reassessment. Check MPAC's page before relying on this.
A finished basement and a second unit
MPAC's list of residential structural features includes basement area size and use, the number of bathrooms and bedrooms, and renovations. A second unit is a separate question. MPAC's multi-residential page, about properties with seven or more units, defines a self-contained unit as one with a kitchen, a bathroom and a separate entrance. Its property codes run by number of units: 301 is a single family detached home not on water, and 332 is typically a duplex with two self-contained units. Which code and class MPAC gives your house after a suite is its decision. For the City's suite rules, see the basement suite rules and paying for a suite.
Relief for modifications for a senior or a person with a disability
MPAC describes a property tax exemption for the increase in value from modifying a home for a senior (65 or older) or a person with a disability. Among its conditions: the person lives there as their personal residence, would otherwise need to live where on-site care is provided, and the property is residential with no more than three units. You apply to MPAC, which inspects the property and asks every two years that you confirm eligibility. Whether a renovation qualifies is MPAC's decision. This is a property tax exemption from MPAC. It is separate from the federal Home Accessibility Tax Credit, a non-refundable credit claimed on line 31285 of the federal tax return.
If you disagree with the new value
You can ask MPAC to review it, free, through a Request for Reconsideration; the deadline is printed on your notice. For a residential property you must file one before you can appeal to the Assessment Review Board, an independent tribunal. MPAC suggests a first test: "Could I have sold my property on January 1, 2016 for the assessed value stated on my Notice?"
Who to ask
This page is not tax advice. For your property, call MPAC at 1 866 296-6722, Monday to Friday, 8 a.m. to 5 p.m. The City lists a local MPAC office at 1135 Lansdowne Street West, Unit 246, and gives 705-742-7777, extension 1865, for tax questions about a project. An accountant can advise on your own situation. A house in a township around the city is billed by that township; see which office issues your renovation permit. Rules differ by property and change; confirm with MPAC or the City before you start.
If you are planning a basement renovation and want someone to look at the space, Gilbert Brothers renovates basements: see basement renovations, or request a free estimate. The estimate is free at your home, the quote covers the whole job before work starts, and you get a reply within one business day.
Frequently asked questions
Is a Property Assessment Change Notice a tax bill?
No. MPAC and the Province both say an assessment notice is not a tax bill. Your municipality sends the bill.
Does a province-wide reassessment mean my taxes go up?
Not necessarily, MPAC says. In a province-wide update, the main factor is how your assessed value changed compared with the average change for your property type in your municipality.
How much will a finished basement add to my assessment?
MPAC values each property from sales of similar properties in its area, so the only figure that applies to your house is the one on MPAC's notice. This page gives no estimate.