Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
Q: My company is offering to relocate me to Toronto. What are the property taxes like for a Toronto condominium?
A: The residential property tax in the city of Toronto is roughly .66%, according to Bob Aaron of the Toronto-based firm Aaron & Aaron.
"So on a $1 million-assessed condo, the annual taxes are $6616.47," Mr. Aaron said.
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Taxes are based on the assessed value of the home, which is reassessed every few years, he explained.
"The Municipal Property Assessment Corporation attempts every few years to readjust everybody to market value," Mr. Aaron said. If the value of the home goes up, the higher tax cost is phased in over the next three years. In addition, he said, "a sale will also trigger a readjustment, as will a renovation permit."
Taxes in Toronto are "on the higher end" compared with other large cities in Canada, such as Vancouver, said Peter Muto of Morris Kepes Winters, also based in Toronto.Tax rates outside the city limits vary, both experts said.
"Toronto taxes are artificially low" for such a large city, Mr. Aaron said, adding that other charges have been levied by the city to make up the difference. "The city has imposed a municipal land transfer tax and huge development charges and garbage fees to plug the gap," he added. For those relocating to Toronto for work, chances are the condo would be their primary residence. This is important, as Mr. Muto offers a word of caution, saying that there’s a significant difference in the tax treatment of residents and non-residents.
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For those who choose to rent out a property instead of making it their home, the rental income is taxed as personal income. "The other main consequence if they didn’t live in the property is not being able to use the principal residence exemption," Mr. Muto said. "[The exemption] allows a Canadian resident to not pay capital gains on the increase in value if the property qualifies as their principal residence."
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