Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
Where in Canada are the highest and lowest property taxes?
Greater Moncton in New Brunswick and Vancouver, British Columbia, have the highest and lowest property taxes, respectively, according to James D. Fraser, partner at Lawson Lundell, a law firm in Vancouver.
But that doesn’t necessarily mean they charge the highest or lowest taxes, said Mr. Fraser, citing research from tax professionals at Altus Group and Burgess Cawley Sullivan & Associates, both in Vancouver, based on information by Altus, the Canadian Real Estate Association, REALPac investment real estate association and municipal websites.
Property tax rates in the country are adjusted annually by municipalities “and vary significantly from coast to coast,” said Michael S. Cirone, partner at Morris Kepes Winters in Toronto, Canada, who practices Canada/U.S. cross-border tax and estate planning law.
They are derived from multiplying the residential tax rate with the assessed value of the property, Mr. Fraser said.
“Since different cities may include different expenses in their rates, rates aren’t necessarily directly comparable between cities,” he explained.
However, assuming rates are comparable, Greater Moncton has the highest published residential tax rate in a major Canadian city in 2017, at $16.49 per $1,000 of assessed value, Mr. Fraser said.
The lowest is $2.55 per $1,000 of assessed value, in Vancouver.
With assessed values for typical two-story, single-family detached homes varying from city to city, the cities with the lowest and highest tax rates don’t necessarily have the highest or lowest taxes, he said. For instance, Vancouver has one of the lowest tax rates but because of high home values—an average of $1.8 million—the city has one of the country’s highest property taxes.
Toronto and Calgary have the highest and lowest average 2017 taxes, at C$6,289 (US$4,946) and C$3,423 (US$2,690) respectively, Mr. Fraser said.
Property tax rates alone don’t paint a complete picture because the property value “is the most critical factor in determining the quantum of property taxes payable,” said Mr. Cirone, who is both a Canadian and U.S. tax lawyer. That’s why even though Vancouver and Victoria, British Columbia, have low tax rates, “you can expect to pay almost double in property taxes in Vancouver because the property values are so much higher.”
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