Yahoo Finance Lower property tax rates are softening the blow of exorbitant B.C. home prices
While average home prices continue to rise throughout Canada, a recent study by real estate listing website Zoocasa.com found another cost homeowners face varies widely across the country and could impact the overall financial equation in buying a home.
The Zoocasa report analyzed municipal property tax rates in 25 Canadian cities, shedding light on where it might be possible to achieve some savings that aren’t necessarily reflected in home prices.
The study, which considered the property tax rates for 2023, focused on the amount of property taxes a resident would pay on a home with average prices of $500,000 and $1,000,000.
“Residential property tax rates are based on an assessment of the home’s value and the residential property tax rate set by the local municipality,” the report said. “Those looking to buy a home in various cities need to be aware of how the local tax rate will impact their overall housing affordability.”
Despite soaring prices, the cities of Vancouver, Abbotsford, Kelowna and Victoria — all in British Columbia — boasted property tax rates below 0.5 per cent, significantly lower than other major Canadian cities. For instance, Vancouver homeowners, despite facing an average home price of $1,188,000, would only need to pay $3,303 in property taxes annually. In contrast, residents of Toronto would face a much higher property tax bill of $7,969 for a similarly priced home.
Montreal’s property tax rate of 0.5305 per cent also places it in the top five. But with an average home price of $519,200, Montrealers would pay a mere $2,754 in property taxes — the lowest amount on the list for an average-priced home. St. John’s, N.L., followed closely, with homeowners paying $2,997 in property taxes on a $280,400 home.
Winnipeg emerged as an outlier in terms of property tax rates. Even though its average home price was less than half of those in Vancouver and Toronto, the property tax rate of 2.64 per cent far exceeded that of other cities analyzed. Homeowners in Winnipeg would pay a staggering $9,111 in taxes for a home valued at $344,600, the city’s average price. This amount is more than double what homeowners in cities such as Edmonton, Quebec City, Calgary, Victoria and Kelowna would pay for a home at the average price.
Other cities with notably high property tax rates included Sault Ste. Marie, Ont., where homeowners would pay $4,759 on an average-priced home of $276,600, owing to a property tax rate of 1.720655 per cent. Charlottetown and Saint John, N.B., followed with rates of 1.67 per cent and 1.62 per cent, respectively. However, due to average home prices below $350,000, residents in there can expect to pay less than those in most Ontario cities.
Surprisingly, Guelph, Ont., topped the list for the highest property tax bill on a home at the average price. With a property tax rate of 1.23 per cent and an average home price of $824,500, homeowners in Guelph would pay $10,134 in property taxes annually. Burlington followed closely, with a property tax rate of 0.86 and an average home price of $1,086,400, resulting in homeowners paying $9,359 in property taxes.
Patti Cosgarea, public relations and content marketing manager at Zoocasa.com, urged potential homebuyers to exercise caution and thoroughly assess the implications of these expenses on overall housing affordability.
“Many people think of property taxes as an afterthought,” Cosgarea said in an interview. “However, 30 years down the line, if somebody has paid off their mortgage, they’re still going to be paying property taxes as long as they own it. So it is an important factor to take into account when looking at property.”
Lower property taxes may be enticing, but it is imperative to consider the broader implications associated with any move.
Vancouver, for example, has witnessed an extended period of property-tax reductions to compensate in part for rapidly escalating price increases, Cosgarea said. The policy has had the unintended effect of making the region more attractive to overseas investors.
“Property taxes have recently gone down in Vancouver in the past couple of years,” Cosgarea said. “However, this has brought a ton of investors to Vancouver and surrounding markets, which has really tightened competition and made conditions even more difficult (for buyers). It’s difficult to say whether higher property taxes are a good or bad thing. It really depends on the market and what the conditions are like.”
• Email: shcampbell@postmedia.com
