A marina is primarily an investment type property. However, Municipal Property Assessment Corporation (MPAC) has chosen to treat it differently than most investment properties by using the cost approach to value. The cost approach estimates the cost of the jetty area including the water covered land along with the cost of the boardwalk area. The additives that are assessed in these areas are as follows:
In addition to the above, a depreciated cost of construction is placed on all buildings on the property plus the land value.
The method of arriving at the land value has always been somewhat of a mystery since MPAC have used residential site values as a basis for the value placed on this property along with some form of a frontage adjustment factor depending on how much water frontage is on the property. Some areas even factor these land rates up because the property is considered in the commercial tax class and therefore, they attempt to value the land as commercial water front land.
Some regional assessment offices have used the income approach to value the marinas. This approach does produce a better indication of the economic value of the property as long as the assessor has separated the business income from the property income. This approach is more consistent with the method used by purchasers in determining the price they will pay when purchasing these properties. However, to date, the cost approach is the method chosen by most assessment regions in the province to arrive at the assessment for property tax purposes.
As an assessment evaluator and a past member of the Ontario Marine Operator's Association, I have reviewed a number of marinas across the province. It would be recommended that all marina operators have their assessment value reviewed to ensure the proper procedure has been followed on your property.
If you require assistance with your marina property taxes call 519 351-5405.