Property Tax Trends In Canada’s Major Cities

Have a problem understanding exactly what property tax is, why you have to pay it and why yours is different from that of a friend whose property seems exactly the same as yours?

This article will help you understand everything you need to know about property tax and the current trends in Canada’s top 5 cities. A property tax (or millage tax) is a levy on property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located, and may be paid to a national government, state, a county or geographical region, or even a municipality. Multiple jurisdictions may also tax the same property.

There are four broad types of property: land, improvements to land (immovable man-made objects, such as buildings), personal property (movable man-made objects), and intangible property. Real property (also called real estate or realty) means the combination of land and improvements. Under a property tax system, the government requires and/or performs an appraisal of the monetary value of each property, and tax is assessed in proportion to that value.

The forms of property tax used varies between countries and jurisdictions. Real property is often taxed based on its classification. Classification is the grouping of properties based on similar use. Properties in different classes are taxed at different rates.

In Canada, property tax varies based on location, current use and value of the land or house. The Real Property Association of Canada (REAL Pac), which represents commercial real estate owners such as pension funds and real estate investment trusts and advocates for lower commercial-to-residential tax ratios, has completed its 11th annual property tax survey and crunched the numbers for the major municipalities in Canada. The association notes that while residential and commercial tax rates have generally been declining, that doesn’t translate into significantly lower tax payments, because assessment values have been on the rise. Below is a summary of their findings in 5 major Canadian cities:

#1. Halifax

Estimated commercial property taxes per $1,000 of assessment: $34.02
Estimated residential property taxes per $1,000 of assessment: $12.11
Commercial-to-residential ratio: 2.81 (down 4.4 per cent from last year)

Halifax’s ratio has been edging down since 2012. A 6.8% increase in the city’s taxable commercial property assessment base this past year allowed for a significant drop in commercial rates, which went down by more than residential rates. As a result, Halifax’s ratio saw the largest drop of all the cities since last year.

#2. Montreal

Estimated commercial property taxes per $1,000 of assessment: $37.12
Estimated residential property taxes per $1,000 of assessment: $8.27
Commercial-to-residential ratio: 4.49 (up 1.9 per cent from last year)

This is the tenth year in a row the ratio has risen in Montreal. Both commercial and residential rates fell from last year, but residential rates are declining quicker. The city has one of the highest estimated commercial tax rates per $1,000 of assessment.

#3. Ottawa

Estimated commercial property taxes per $1,000 of assessment: $30.41
Estimated residential property taxes per $1,000 of assessment: $11.27
Commercial-to-residential ratio: 2.7 (up 0.4 per cent from last year)

The ratio is expected to remain stable for the rest of Ontario’s 2013-2016 property assessment cycles. Ottawa has one of the highest estimated commercial tax rates per $1,000 of assessment.

#4. Toronto

Estimated commercial property taxes per $1,000 of assessment: $28.98
Estimated residential property taxes per $1,000 of assessment: $7.23
Commercial-to-residential ratio: 4.01 (down 1.5 per cent from last year)

The ratio has been falling for 11 years. The city aims to reduce the tax ratios for commercial properties to 2.5 times the residential rate by 2020. It has cut residential taxes for the sixth year in a row.

#5. Vancouver

Estimated commercial property taxes per $1,000 of assessment: $15.91
Estimated residential property taxes per $1,000 of assessment: $3.68
Commercial-to-residential ratio: 4.33 (down 0.4 per cent from last year)

The ratio has been fairly stable over the past three years.