By: Zoocasa
Prospective buyers are often focused on the down payment and mortgage to the exclusion of other carrying costs, such as maintenance, land transfer tax, utilities and property tax.
That last one can be thousands of dollars per year and it’s definitely something that’s important to budget for.
Nevertheless, while they can be a drag on one’s finances, they’re an essential levy and it’s often one of the only ways municipalities are legally able to get revenue at all.
Property tax is levied by each city and is based on an assessment on your home’s value, which is based on factors, such as the age of the home, renovations, the size of the lot, etc. It’s used to pay for essential city services such firefighters, police and transit (what, you thought that stuff was free!?). Homes are assessed between one and four years. That can become an affordability challenge for many. Let’s say, seniors on a fixed income, who bought and paid off a home in Toronto 50 years ago but are required to pay over $10,000 a year in property taxes just because the city around them has appreciated so much and services have increased.
Some cities have tried to reduce this burden, such as Vancouver. Vancouver real estate that has increased in value by more than 19.6 per cent sometimes has the average tax rate applied rather than the actual value. But the burden is already reduced somewhat since Vancouverites pay the least tax in the entire country, at about 0.25 per cent.
The City of Toronto also has a fairly low tax rate at about 0.6355 per cent. For a home assessed at $1 million that’s just $6,335 a year. (And a quick browse of MLS listings in Toronto shows that even a $1 million house is becoming a rarity) But don’t cheer yet -- they’re only able to keep it so low because the city gets so much revenue from another tax - the Land Transfer Tax. Residents are required to pay double of this tax when they buy a property -- once to the province and once to the city, so there’s no way to escape lining the coffers of the city treasury.
Calgary is just next to Toronto with the 6th least expensive property tax rate in the country, at 0.6357 per cent. Your $1 million piece of Calgary real estate would cost just an extra $2 a year to maintain compared to Toronto.
Meanwhile, Edmonton, although in the same province, charges much more at about 0.86 per cent. It doesn’t sound like much, but it’s a significant difference. The property tax on your $1 million Edmonton home would cost $8,687 annually.
But these places are nothing like Saint John, New Brunswick which has the highest property tax in Canada at about 1.8 per cent. That same million dollar home would cost an incredible $17,850 a year. The upside is of course, you’re likely able to buy a tract of land the size of the entire Toronto downtown for that price.
Zoocasa compared the property tax rates of 25 major cities across Canada to understand how taxes range between municipalities. Check out the infographic for the full list:
Zoocasa.com is a leading real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse real estate listings on the website or the free iOS app.