Residential tax rate highest in Canada

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This article was published 25/10/2017 (2940 days ago), so information in it may no longer be current.

Winnipeg has the highest residential property tax rate of any major city in Canada, according to a new report from Altus Group.

In its 2017 Canadian Property Tax Rate Benchmark Report released on Tuesday, the Toronto-based real estate research organization notes the City of Winnipeg raised its residential property tax rate this year to $12.15 for every $1,000 of a home’s assessed value.

That’s up 37 cents, or 3.12 per cent, from a year ago, when it was $11.78 per $1,000 of assessed value. The increase was enough to move it past Halifax into the top spot.

Last year, Winnipeg had the second highest tax rate at $11.78, compared to Halifax’s $12.08. However, not only did Winnipeg raise its rate this year, Halifax also lowered its rate to $11.98 per $1,000 of assessed value.

But while Winnipeg has the highest tax rate, that doesn’t mean homeowners here pay the most in property taxes, said Terry Bishop, president of Altus’s property tax group, and Peter Squire, residential market analyst for the Winnipeg Realtors Association (WRA).

That’s because what they pay is also determined by the value of their properties, and residential property values in Winnipeg are lower than in many other major Canadian cities, they said. So homeowners in Vancouver, for example, tend to pay more in property taxes than homeowners in Winnipeg, even though Vancouver’s residential property tax rate is substantially lower — $2.55 per $1,000 of assessed value.

Squire also noted Manitoba homeowners can get a provincial education property tax credit of up to $700 per year if their annual property tax bill is $2,300, which can reduce it by about 25 per cent, he said. “So it clearly makes a difference.”

Winnipeg Chamber of Commerce president Loren Remillard said the city isn’t solely to blame for Winnipeg having the highest residential property tax rate. He noted education taxes now account for nearly half of the yearly property tax bill, and they’re set by local school boards, not the city.

“So it skews that number quite a bit,” he said.

He maintained the city has done a pretty good job of trying to limit its property tax increases by freezing taxes for 10 consecutive years, and increasing them by roughly the rate of inflation in the last few years.

“So the city should receive some credit,” he said.

Although Winnipeg has the highest residential property tax rate, it compares much more favourably when it comes to its commercial property tax rate. There, it’s ranked fifth highest among the 10 cities, with a rate of $24.36 per $1,000 assessed value.

Although this year’s rate is higher than last year’s, when the city also ranked fifth, this year’s increase was smaller than on the residential side — 27 cents, or 1.12 per cent.

The report also shows Winnipeg has the third lowest commercial-to-residential property tax ratio, at 2.01. That means a commercial property owner pays twice as much in property taxes as a residential property owner for a similar-valued property.

Bishop and Remillard said while a city would like to have the lowest commercial tax rate, being in the middle of the pack is still better than having the highest rate. That distinction belongs to Vancouver, with a ratio of 4.87. That means commercial property owners there pay nearly five times as much as residential property owners for a similar-value property.

“A lower commercial property tax ratio should help make cities more competitive, promote job growth and can help to generate more stable and sustainable revenue,” Bishop said.

Remillard said having a lower ratio will hopefully prompt more investors to invest in properties in Winnipeg, rather than cities where the property tax rates are higher.

Bishop said it’s also encouraging that Winnipeg’s ratio is down slightly from a year ago.

“It shows it’s coming in the right direction.”

murray.mcneill@freepress.mb.ca