If you own or lease business space in London, Ontario, property tax can become a big part of your monthly costs. It affects your rent, cash flow, profit, and long-term planning.
For business owners, property tax is not always easy to understand. MPAC assesses the property value. The City of London sets tax rates based on its budget, provincial education taxes, and property assessment data. Then the property owner receives the bill.
This guide explains how property tax works for businesses in London, who pays it, how it affects your accounting, and what you can do if the assessment seems wrong.
Key Takeaways
- Business property tax is based on your property assessment and the tax rate set by the municipality.
- MPAC determines the assessed value of properties in Ontario.
- The City of London uses the MPAC assessment, municipal budget needs, and provincial education taxes to calculate yearly property tax.
- Owners usually receive the property tax bill, but commercial tenants may pay property tax indirectly through rent or additional rent.
- If you disagree with your assessment or classification, you can file a Request for Reconsideration with MPAC for free.
- Business property tax may be deductible when it relates to property used in your business.
What Is Business Property Tax?
Business property tax is the tax charged on property used for business purposes. This may include a storefront, office, warehouse, clinic, restaurant, workshop, or mixed-use building.
In Ontario, the property tax system has two main parts:
- Property assessment
MPAC assesses and classifies the property. - Tax rate calculation
The municipality applies the tax rate to the assessed value.
For London businesses, the City of London says property taxes are based on several factors, including the city budget, provincial education taxes, and the MPAC property assessment.
A simple way to understand it is:
Assessed property value × applicable tax rate = property tax bill
The actual bill can vary because tax rates depend on the property class, local budget, education tax, and any special charges or adjustments.
Who Pays Property Tax: The Owner or the Tenant?
The property owner is usually responsible for the property tax bill because the tax account is tied to the property.
But if you lease commercial space, you may still pay property tax indirectly. Many commercial leases are structured as net leases or triple-net leases. In those cases, the tenant may pay rent plus additional costs such as property tax, insurance, utilities, repairs, and maintenance.
This means even if you do not own the building, property tax can still affect your monthly business cost.
Before signing or renewing a lease, review whether your rent includes property tax or whether property tax is charged separately as additional rent. This is important for cash flow planning.
What Types of Business Properties Are Taxed?
Business property tax may apply to many property types, such as:
- retail stores
- restaurants and cafes
- offices
- clinics
- warehouses
- industrial units
- commercial condos
- mixed-use properties
- service shops
- salons and studios
If a property is used for business purposes, it may fall under a commercial, industrial, or other business-related property class.
The classification matters because different property classes can have different tax rates.
How Property Tax Works in London, Ontario
Business property tax in London follows the same broad system used across Ontario, but London’s own rates and billing dates apply.
1. MPAC Assesses the Property
MPAC assesses property value and classification. The assessed value is not always the same as today’s selling price. It is based on Ontario’s assessment system and valuation rules.
MPAC says property owners can file a Request for Reconsideration if they disagree with their assessed value or property classification.
2. The City of London Sets the Tax Rate
The City of London sets tax rates based on local budget needs and other tax requirements. The city states that property tax calculations consider the multi-year budget, provincial education taxes, and the MPAC property assessment.
3. The Property Tax Bill Is Issued
The owner receives the bill from the city. For 2026, the City of London says interim tax bills are due in February and March, while final tax bills are due in June, August, and October.
Always check the current bill or City of London website because due dates can change from year to year.
Why Business Property Tax Can Feel High
Commercial property tax can feel high because business properties often fall into different tax classes than residential properties. The final tax amount depends on the property’s assessed value, tax class, and the rate set for that class.
A small office may pay much less than a large commercial building. A busy retail unit in a strong location may pay more than a smaller unit in a lower-value area.
That is why it is risky to rely on a general monthly estimate. Two businesses in London may have very different property tax costs, even if both are small businesses.
The better approach is to review:
- your tax bill
- your MPAC assessment
- your property class
- your lease terms
- your share of additional rent
- year-over-year increases
What Is the Small Business Property Tax Subclass?
Ontario allows municipalities to create a Small Business Property Tax Subclass. This is an optional tool that municipalities can use to reduce property tax rates for eligible small business properties.
MPAC explains that municipalities are responsible for setting the eligibility criteria and deciding how the subclass will apply. Municipalities also need a process to identify eligible properties and notify MPAC so those properties can be classified for tax purposes.
This means the small business subclass is not automatic everywhere.
For a London business, the safe step is to check whether the City of London has a current small business subclass program and whether your property qualifies.
Can a Business Reduce Its Property Tax?
You cannot simply avoid business property tax unless a specific exemption applies. But there are ways to make sure you are not overpaying.
1. Review the MPAC Assessment
Check the property details MPAC has on file. Look at building size, lot size, classification, use, and comparable properties.
A small error in the property record can affect the assessed value.
2. File a Request for Reconsideration
If you believe the assessed value or classification is wrong, you can file a Request for Reconsideration with MPAC. MPAC says this review is free and allows property owners to provide new information or correct inaccurate details.
Reasons may include:
- assessed value seems too high
- property classification seems wrong
- property size or building details are incorrect
- comparable properties appear assessed lower
- the property has condition issues not reflected in the assessment
3. Appeal to the Assessment Review Board
If the Request for Reconsideration does not solve the issue, you may be able to appeal to the Assessment Review Board.
MPAC says property owners generally have 90 days from the date MPAC issues the RfR result to submit an appeal to the Assessment Review Board.
4. Keep Supporting Records
Useful records may include:
- photos of the property
- recent appraisals
- lease agreements
- comparable property data
- sales data
- repair records
- vacancy records
- property condition notes
- floor plans or measurement details
Good documentation makes your case stronger.
Property Tax and Commercial Leases
For tenants, property tax often appears inside the lease rather than as a city bill.
Some leases include property tax in the base rent. Others charge it as additional rent. In a triple-net lease, the tenant often pays a share of property tax along with other building costs.
This can affect your bookkeeping because property tax may appear under rent, occupancy cost, common area maintenance, or additional rent.
If you are a tenant, ask for a clear breakdown from your landlord. You should know how your share is calculated and whether it changes each year.
HST and Commercial Property Costs
HST on commercial real estate can be tricky.
CRA explains that a lease, licence, or similar arrangement for commercial real property is generally a taxable supply unless a specific exemption applies. CRA also says property and business taxes paid by an owner to a municipality are generally not subject to GST/HST. But if a tenant pays an amount for property tax as part of rent or additional rent, that amount may be treated as part of the taxable lease payment and may be subject to GST/HST in the same way as rent.
This is why business owners should not assume that property tax recoveries under a commercial lease are always HST-free.
If you are leasing commercial space, review the lease invoice carefully. If you are registered for HST, your accountant can also check whether input tax credits are being handled correctly.
Is Business Property Tax Deductible?
Property tax can affect your business income tax return.
CRA says you can deduct property taxes incurred for property used in your business. For example, property taxes for the land and building where your business operates may be deductible.
For incorporated businesses, property tax or property tax recovery charges should be recorded properly in the company books. For tenants, the amount may be part of rent or occupancy expense. For owners, it may be recorded as property tax expense.
Good bookkeeping matters because the tax treatment depends on how the property is used and how the cost is billed.
Other Property-Related Costs Businesses Should Track
Property tax is only one part of occupancy cost.
London businesses should also track:
- rent
- additional rent
- utilities
- insurance
- repairs and maintenance
- common area maintenance
- parking fees
- waste collection costs
- snow removal
- security
- leasehold improvements
- property tax recoveries
- HST on rent and related charges
These costs should be coded clearly in your bookkeeping system. This helps with tax filing, cash flow planning, and lease review.
Property Tax for Business Owners vs Tenants
If You Own the Property
You should track:
- property tax bills
- payment dates
- interest or penalties
- property tax adjustments on purchase or sale
- mortgage interest
- insurance
- repairs
- improvements
- depreciation or capital cost allowance review
- rental income, if part of the property is leased out
Property tax bills should be saved with your year-end records.
If You Lease the Property
You should track:
- base rent
- additional rent
- HST charged
- property tax recovery charges
- common area maintenance
- landlord statements
- lease amendments
- rent deposit details
Do not rely only on bank payments. Keep the invoices and statements because they explain what the payment was for.
How Property Tax Affects Cash Flow
Property tax can create cash flow pressure because bills may be due in large installments.
The City of London offers a pre-authorized payment plan that can spread payments across the year. For 2026, the City says payments under its plan are taken over 10 months from January to October.
For property owners, this can make budgeting easier.
For tenants, the same idea applies indirectly. If your landlord estimates property tax and charges it monthly, you may still face an annual adjustment later. Build some buffer into your cash flow if your lease allows year-end reconciliations.
Common Mistakes Businesses Make With Property Tax
Ignoring the Assessment Notice
Do not wait until the tax bill arrives. Review the MPAC assessment notice when you receive it.
Assuming the Bill Is Always Correct
Assessment data can contain errors. If the property class, size, or use is wrong, the tax cost may be affected.
Missing the RfR Deadline
If you want MPAC to review the assessment, pay attention to the deadline shown on the notice. MPAC says filing an RfR is free, but timing matters.
Not Reviewing Lease Charges
Tenants often pay property tax through additional rent without checking the breakdown. Always ask for clear support.
Recording Property Tax Incorrectly
If property tax is buried under rent or mixed with other costs, your year-end numbers may be harder to review.
Forgetting HST on Additional Rent
CRA notes that amounts paid by a lessee for property taxes can be part of the consideration for the rental of commercial property and may follow the same GST/HST status as rent.
How Multi Tax Services Can Help
Property tax is not only a city bill. It affects bookkeeping, rent costs, HST, corporate tax filing, and cash flow.
Multi Tax Services helps businesses in London, Ontario with:
- bookkeeping cleanup
- corporate tax filing
- rent and property tax expense tracking
- HST review
- year-end accounting
- cash flow planning
- financial statement preparation
- business expense review
If your property tax costs are rising, your lease charges are unclear, or your books do not separate rent, HST, and property tax properly, an accountant can help you clean up the records and plan better.
Conclusion
Business property tax in London, Ontario becomes easier to manage when you understand the basics. MPAC assesses the property. The City of London sets the tax rate. Owners receive the bill. Tenants may pay the cost through rent or additional rent.
The key is to review your assessment, understand your lease, track property tax properly in your books, and act quickly if something looks wrong.
For business owners, property tax is part of the bigger financial picture. It affects monthly costs, HST, deductions, cash flow, and year-end tax filing. Multi Tax Services can help London businesses keep these records clean, review the accounting side, and stay ready for tax season.
FAQs About Business Property Tax in London, Ontario
Does a business have to pay property tax in Ontario?
Yes. Business properties are generally subject to property tax unless a specific exemption applies. If you lease commercial space, you may pay property tax indirectly through rent or additional rent.
How is commercial property tax calculated in London?
The basic calculation uses the property assessment and the applicable tax rate. The City of London says tax rates are affected by the city budget, provincial education taxes, and MPAC property assessment.
Who assesses commercial property in Ontario?
MPAC assesses properties in Ontario. If you disagree with the assessed value or classification, you can file a Request for Reconsideration with MPAC.
Can I appeal my business property assessment?
Yes. You can start with a Request for Reconsideration through MPAC. If you still disagree after the result, you may be able to appeal to the Assessment Review Board within the required timeline.
Is property tax deductible for business?
Property tax related to property used in a business may be deductible. CRA says property taxes incurred for property used in business can be deducted.
Do commercial tenants pay HST on property tax charges?
It depends on how the lease is structured. CRA says property taxes paid by the owner to the municipality are generally not subject to GST/HST. But if a tenant pays property tax as part of rent or additional rent, it may be part of the taxable lease payment and subject to GST/HST in the same way as rent.
What is the Small Business Property Tax Subclass?
It is an optional property tax subclass municipalities can use to reduce rates for eligible small business properties. Eligibility rules are set by the municipality, so business owners should check local rules before assuming they qualify.
