Property Tax

Old Feb 6th 2021, 11:23 am
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Default Property Tax

(mistakenly posted under Maple Leaf originally, sorry for double-posting)

Dear all,

me and my wife have been considering moving to BC and are trying to make sense of the property tax rules in Canada. We've been quite taken aback by how exorbitant some of the rates are, compared to the council tax in the UK.

Let's Vancouver as an example, as it has some of the most expensive real estate in the country. A property worth $1,500,000 would amount to $4,389 in property taxes in central Vancouver. Which is fair enough, I guess, but the rates increase as you move out the city centre - $4,766 in North Vancouver and $6,571 in New Westminster. The rates are even higher in provincial towns, with Kelowna starting at 0.53%, going up to 0.74%.

That's seems like a lot of money over the years. Does this really apply to one's primary residence, no exceptions? I'm thinking about homeowners on modest income and mortgages, or pensioners, who've been fortunate enough to see the value of their homes go up substantially over the years - as would be the case in Vancouver and Toronto - how do they manage?

Are other taxes in Canada that much lower compared to the UK, or public services more affordable, so that it kind of evens out at the end of the year?

Very grateful for your thoughts on this.

Thanks
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Old Feb 6th 2021, 2:43 pm
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Default Re: Property Tax

$4389 for a $1.5mi property is very cheap, I assume that is asking price, not taxable value. The taxable value of a property is often considerably lower than the market value. Don't move to the GTA if that cost bothers you - a house there with that value would carry a tax bill of over $12k.
Property taxes are calculated by multiplying your assessed value by the tax rate for your area. In small towns if the assessed value is lower then the tax rate portion tends to be higher.
As far as I am aware property taxes are not something you can avoid paying - there are some reductions you can get eg, by owning managed forrest, a working farm or conservation land.
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Old Feb 6th 2021, 2:54 pm
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Default Re: Property Tax

Originally Posted by karabegic View Post
(mistakenly posted under Maple Leaf originally, sorry for double-posting)
We've been quite taken aback by how exorbitant some of the rates are, compared to the council tax in the UK.
You're not the only one who finds these property taxes exorbitant. I found it so hard getting used to that I found renting easier, also with the idea that I used to move too often when I lived in Canada. You will also find that the municipality is way less under financial pressure than in the UK. If they need more money, they simply raise the taxes quite easily. I always had the feeling in the UK that's more complicated to raise the council tax.

If. let's say the property tax is $4000 a year, then you're effectively paying $40.000 if you own the property for 10 years. But then there is the possibility that the property rises in value in 10 years, so you'll make up for the paid 40k.

On the positive side, payroll tax is lower in Canada than in most places in Europe, including the UK. So comparing isn't that easy.

There is also the apparent consensus in this forum that income/money goes further when in Canada as opposed to the UK. However, I often doubted that, when it comes to things like property tax, airline fares or car insurance, it was often quite the opposite.


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Old Feb 6th 2021, 4:47 pm
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Default Re: Property Tax

Originally Posted by karabegic View Post
(mistakenly posted under Maple Leaf originally, sorry for double-posting)

Dear all,

me and my wife have been considering moving to BC and are trying to make sense of the property tax rules in Canada. We've been quite taken aback by how exorbitant some of the rates are, compared to the council tax in the UK.

Let's Vancouver as an example, as it has some of the most expensive real estate in the country. A property worth $1,500,000 would amount to $4,389 in property taxes in central Vancouver. Which is fair enough, I guess, but the rates increase as you move out the city centre - $4,766 in North Vancouver and $6,571 in New Westminster. The rates are even higher in provincial towns, with Kelowna starting at 0.53%, going up to 0.74%.

That's seems like a lot of money over the years. Does this really apply to one's primary residence, no exceptions? I'm thinking about homeowners on modest income and mortgages, or pensioners, who've been fortunate enough to see the value of their homes go up substantially over the years - as would be the case in Vancouver and Toronto - how do they manage?

Are other taxes in Canada that much lower compared to the UK, or public services more affordable, so that it kind of evens out at the end of the year?

Very grateful for your thoughts on this.

Thanks
Property taxes are determined by the town / City jurisdiction you live in, primary and any other property you might own.
All this and more in our wonderfully informative Wiki https://britishexpats.com/wiki/Category:Taxes-Canada


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Old Feb 6th 2021, 6:52 pm
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Default Re: Property Tax

I also think the property tax may cover more than the council tax in the UK?

I live in Vancouver, and my property tax will run between $5,000 and $6,000 for this year. We pay in two halves, an amount by February 4 that is estimated to be half of what the final total was the previous year. Then the remaining amount due by July 2 determined on the city budget that was set in April.

I have just paid a little over $2500 based on what we paid last year. The city council is currently asking for input for the coming budget discussions, but my guess is that the rate will increase ........ so I will have to pay something over that amount in July.

Included in the property tax are services such as sewer, water, emergency services (police, fire, ambulance, 911 call centre, etc), hospitals, schools, parks, city maintenance (roads, snow clearing in winter), and many others.

Every 4 years there is a city council election and then we also vote on 4- or 5- year big budget items, such as acquiring space for more parks; developing or replacing community centres; renovation of city-owned theatres; new firehalls, etc. These ask for permission for the City Council to borrow million-dollar amounts to fulfill the needed items. There are usually 3 or 4 such referendums to be voted on each time.

Some of these items of course turn up every time as they are really ongoing projects.

The cost of these is also added on to the property tax.

The property tax is based on the assessed value of your house and the land on which it stands, and the rate determined by the city as a percentage, which might be something 0.00045%. The result of this is that the more valuable your property, the more property tax to pay.

It is all itemised on the Property Tax Bill that you get.

In Vancouver you may well find that the land is valued at $1 million, the house at $30,000, if it is one of the older smaller ones. There is no land to spare in Vancouver, and more cannot be added by extending the city borders. Hence land is very valuiable, and accounts for this huge discrepancy.

Each property is assessed in July and determined on the average price of houses sold in the immediate area ......... there does not appear to be any physical examination.

Note that in Vancouver, there are two discounts amounting to a few hundred dollars ......... one for Homeowner (who must live in the property) and one for Seniors, which is slightly higher as they do not pay the Schools tax. Those discounts are gradually phased out once the assessed value of the house reaches a certain level until eventually the house owner gets none and pays the full amount.

I think the phasing out this year will begin at something just over $1.6 million.

We once owned 20 acres in the Cariboo. The Assessment Office for that was based in Victoria, as it was counted rural. They could not find a property of similar size anywhere near ....... not surprising as we were in the middle of Crown owned land, and other properties within 100 kms were either 1-5 acres or hundreds of acres.

They finally decided to assess our property based on a 100 acre property about 150 kms away, with a estimated reduction for the size. If I remember correctly, I think we paid around $400-500 a year when we sold in 2014 ............... it didn't cover too much as we had no services, and were outside the emergency services from the nearest town (60 kms away), so no ambulance service or anything, except we did pay schools and hospitals taxes



It is possible for a house owner to defer paying the tax, with no penalty, until the house is sold when the amount unpaid plus a small rate of interest is deducted from the sale price before anyone else gets the money, whether that be the home owner or mortgage company.

I understand that this is what a number of people have done during the covid era .......... and I think that therefore there must be a way to pay the deferred taxes once the home owner is earning again.

Our financial manager advised us years ago that this way out is not really a good way, especially as a senior who may need much money for assisted care ...... although that does depend on whether you can afford to even think of paying the tax, when it is the only way to keep your house.
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Old Feb 6th 2021, 6:54 pm
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Default Re: Property Tax

I recall that you don't have to pay any council tax in the UK if you've lost your income, like due to a job loss. This is also not a deferment until you have a job or sell the house, it's just that you're not paying during that time of no income.

Also I seem to recall that in the UK you only pay 75% of the council tax if you're a single occupier.

Canada doesn't offer these options, as far as I know. If you're in the unlucky situation that you're without income, you're more likely forced to sell than in the UK.

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Old Feb 6th 2021, 10:57 pm
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Default Re: Property Tax

Originally Posted by OrangeMango View Post
I recall that you don't have to pay any council tax in the UK if you've lost your income
It used to be a reduction to 20% but it's now 17.5% with Universal Credit.

I'm always a bit bemused by this talk of property taxes being more than the UK.

I know when I moved here there wasn't a great deal of difference in the amount I paid - it was just that in Bristol it was a 2 bed terraced house, no parking, small garden and here a 4 bed, detached house with large garden, garage and drive.

I've just looked up the current council tax for my old house and it's £1603 a year. = $2800.
Here the full tax is $2250.
So I am paying less for a much bigger property in Canada and the snow clearance budget is a hell of a lot more than it would be in Bristol!!

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Old Feb 7th 2021, 12:53 am
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Default Re: Property Tax

Originally Posted by BristolUK View Post
It used to be a reduction to 20% but it's now 17.5% with Universal Credit.

I'm always a bit bemused by this talk of property taxes being more than the UK.

I know when I moved here there wasn't a great deal of difference in the amount I paid - it was just that in Bristol it was a 2 bed terraced house, no parking, small garden and here a 4 bed, detached house with large garden, garage and drive.

I've just looked up the current council tax for my old house and it's £1603 a year. = $2800.
Here the full tax is $2250.
So I am paying less for a much bigger property in Canada and the snow clearance budget is a hell of a lot more than it would be in Bristol!!
Bristol ............. I never owned a house in England, we left just 10 days after we got married .............. and that was over 50 years ago, so anything back then would have no context to today.

Just as I know the property tax we paid here back in 1972 had no context to what we pay today for the very same house ........... which is one heck of a lot more than you do in Moncton!!!!
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Old Feb 7th 2021, 3:03 am
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Default Re: Property Tax

Originally Posted by scilly View Post
Just as I know the property tax we paid here back in 1972 had no context to what we pay today for the very same house ........... which is one heck of a lot more than you do in Moncton!!!!
I can also remember in my early years on BE seeing posts from people in other places, with much more expensive houses paying similar amounts to me.
At first glance it seemed odd, but then I thought if an average house in one city is $150k and it's $300k in another city, the cost of collecting the garbage or plowing the snow isn't necessarily twice as much so the tax needn't be that much more.
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Old Feb 7th 2021, 9:18 am
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Default Re: Property Tax

Originally Posted by BristolUK View Post

I'm always a bit bemused by this talk of property taxes being more than the UK.
It's often hard to compare, as property sizes are also different as well in Canada compared to those small houses in the UK.

It's just that property tax in Canada can only be deferred if you're not having a job or an income, in the UK you don't pay at all if you have no income.


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Old Feb 7th 2021, 3:07 pm
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Default Re: Property Tax

Originally Posted by OrangeMango View Post

It's just that property tax in Canada can only be deferred if you're not having a job or an income, in the UK you don't pay at all if you have no income.
17.5% if on UC as mentioned above.
Deferral depends on province. In NB deferral is an option for seniors and in Canada you can get it reduced depending on income just as you can in the UK. It varies province to province.

I get a $300 reduction from the full amount. It's the maximum reduction and it's not much on the full amount of $2250. But when we moved here in 2005 it was a reduction on $1400 which was quite a difference. It might have been $200 back then. I remember reading that it hadn't changed for about 20 years and I remember thinking that when it went up to $200, the property tax on my place was probably only about $400
Give me a 50% reduction now please.
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Old Feb 7th 2021, 6:01 pm
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Default Re: Property Tax

Originally Posted by BristolUK View Post
17.5% if on UC as mentioned above.
Deferral depends on province. In NB deferral is an option for seniors and in Canada you can get it reduced depending on income just as you can in the UK. It varies province to province.

I get a $300 reduction from the full amount. It's the maximum reduction and it's not much on the full amount of $2250. But when we moved here in 2005 it was a reduction on $1400 which was quite a difference. It might have been $200 back then. I remember reading that it hadn't changed for about 20 years and I remember thinking that when it went up to $200, the property tax on my place was probably only about $400
Give me a 50% reduction now please.
You're lucky!
(for seniors over 65 years old)If you own a residential property, you may be eligible for a $198 property tax credit if all of the following qualifications are met: (list)
Deferrals in my City are for if you are selling and are over 65 or are on disability.. and the combined household income (applicant, spouse and all other registered owners) is $36,900 or less.
This program allows you to defer the full amount of property taxes (subject to interest) until the property is sold.

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Old Feb 7th 2021, 7:05 pm
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Default Re: Property Tax

Originally Posted by Siouxie View Post
You're lucky!
Looks like there's $500 available on this one - https://www.ontario.ca/page/senior-h...erty-tax-grant

This one pays more - https://www.canada.ca/en/revenue-age...nswers.html#q2
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Old Feb 7th 2021, 7:19 pm
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Default Re: Property Tax

Originally Posted by BristolUK View Post
Thanks for that!
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Old Feb 7th 2021, 7:58 pm
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Default Re: Property Tax

Ontario Trillium Benefit provides low and medium income people a tax credit on their Property taxes.
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