Lower property tax rates softening blow of exorbitant B.C. home prices

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Millicent Wong
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British Columbia cities have property tax rates below 0.5%, significantly lower than other major Canadian cities

Published on June 17, 2023 • Last updated 11 hours ago • 3 minutes reading time

A for sale sign outside a home in Vancouver. A for sale sign outside a home in Vancouver. Photo by Richard Lam/PNG

As average house prices continue to rise across Canada, a recent study by real estate exchange Zoocasa.com found that other costs homeowners face vary widely across Canada and could impact the overall financial outcome of a home purchase.

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The Zoocasa report analyzed municipal property tax rates in 25 Canadian cities and shed light on where savings that might not necessarily be reflected in property prices might be possible.

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The study, which examined property tax rates for 2023, focused on the amount of property taxes a resident would pay for a home with average prices of $500,000 and $1,000,000.

“Homeownership tax rates are based on an estimate of the value of the home and the homeownership tax rate set by the local municipality,” the report said. “People looking to buy a home in different cities need to be aware of how the local tax rate affects overall housing affordability.”

Despite rising prices, the cities of Vancouver, Abbotsford, Kelowna and Victoria – all in British Columbia – had property tax rates below 0.5 percent, significantly lower than other major Canadian cities. For example, despite an average home price of $1,188,000 in Vancouver, homeowners would only have to pay $3,303 in property taxes annually. In contrast, Toronto residents would face a much higher property tax bill of $7,969 for a similarly priced home.

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With a property tax rate of 0.5305 percent, Montreal also ranks in the top five. But with an average home price of $519,200, Montreal residents would only pay $2,754 in property taxes — the lowest amount on the list for an average-priced home. St. John’s, NL was close behind, where homeowners paid $2,997 in property taxes on a $280,400 home.

In terms of property tax rates, Winnipeg was an outlier. Although the average home price was less than half that of Vancouver and Toronto, the property tax rate of 2.64 percent far exceeded that of other analyzed cities. Homeowners in Winnipeg would pay a staggering $9,111 in taxes for a $344,600 home, the city’s median price. That amount is more than double what homeowners in cities like Edmonton, Quebec City, Calgary, Victoria and Kelowna would pay for a house at the average price.

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Other cities with particularly high property tax rates were Sault Ste. Marie, Ontario, where a property tax rate of 1.720655 percent would see homeowners pay $4,759 for a home with an average price of $276,600. Charlottetown and Saint John, NB followed with rates of 1.67 and 1.62 percent, respectively. However, with average home prices under $350,000, residents can expect to pay less than most Ontario cities.

Surprisingly, Guelph, Ontario, topped the list with the highest property tax burden for an average-priced home. With a property tax rate of 1.23 percent and an average home price of $824,500, homeowners in Guelph would pay $10,134 in property taxes annually. Burlington followed closely with a property tax rate of 0.86 and an average home price of $1,086,400, resulting in homeowners paying $9,359 in property taxes.

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Patti Cosgarea, PR and content marketing manager at Zoocasa.com, urged prospective homebuyers to exercise caution and carefully consider the impact of that spending on overall housing affordability.

“A lot of people see property taxes as an afterthought,” Cosgarea said in an interview. “But if someone has paid off their mortgage 30 years later, they will still pay property taxes as long as they own the property. Therefore, it is an important factor to consider when viewing a property.”

Lower property taxes may be tempting, but it’s imperative to consider the broader implications that come with any move.

Vancouver, for example, has had an extended period of property tax cuts to partially offset soaring price increases, Cosgarea said. The policy had the unintended effect of making the region more attractive to foreign investors.

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“Property taxes have come down in Vancouver in recent years,” Cosgarea said. “However, this has brought a lot of investors to Vancouver and surrounding markets, which has really increased competition and made conditions (for buyers) even more difficult.” It’s hard to say whether higher property taxes are a good thing or a bad thing . It really depends on the market and conditions.”

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