Major Canadian cities continue to struggle to balance burdens between commercial and resident taxpayers, The Canadian Business Journal

TORONTO, Oct. 26, 2022 (GLOBE NEWSWIRE) — Altus Group Limited (“Altus” or “we”) (TSX: AIF) is a market-leading Intelligence as a Service provider serving the global commercial real estate industry. , the Canadian Real Estate Association (“REALPAC”) today announced 2022 Canadian Property Tax Rate Benchmark Report This is a detailed look at commercial and residential property tax rates in 11 major cities across Canada.

Across Canada, all property owners pay taxes based on the appraised value of their property, but the tax rate per dollar of property value varies depending on whether the property is residential or commercial. This report examines how changes in value between classes of property affect tax increases, and spotlights how local government efforts to mitigate tax increases may contribute further to inequities. .

Commercial inhabitant tax rate

Commercial and resident tax rates are the key indicators in the report comparing commercial and resident tax rates. For example, if the ratio is 2.50, this means that the commercial tax rate is 2.5 times (2.5 times) the residential tax rate.

The 2022 report found that commercial tax rates are more than double the resident tax rate in seven of the 11 cities surveyed. This means that commercial property is subject to more than twice the property tax rate as residential property of comparable value. The average commercial and residence tax ratio in 2022 was 2.80, a slight increase of 2.42% from the 2021 average ratio of 2.73. Average ratio increases were driven primarily by ratio increases in Calgary, Edmonton and Halifax, which ranged from 6.5% to over 10%.

Year-on-year ratio of commercial and residential taxes
city 2022 2021 % Change
montreal 4.21 4.17 1.08%
Quebec City 3.51 3.47 1.30%
Vancouver 3.46 3.41 1.35%
Toronto 3.36 3.44 -2.42%
Calgary 3.07 2.78 10.27%
Halifax 3.06 2.85 7.16%
average 2.80 2.73 2.42%
edmonton 2.68 2.52 6.53%
Ottawa 2.39 2.37 0.95%
Winnipeg 1.92 1.93 -0.23%
Saskatoon 1.61 1.61 0.18%
Regina 1.51 1.51 -0.09%

“Post-pandemic markets are incredibly volatile and governments need to proactively address changes in value without widening inequalities between commercial and resident taxpayers.” said Kyle Fletcher, President, Canadian Property Taxes, Altus Group. “There are two factors that drive property taxes: valuations and local government revenue requirements. To keep up, we need to embrace more frequent reassessments, and local governments need to move away from policies that shift the bulk of the tax burden to commercial real estate.”

Regional trend analysis

  • Calgary We observed the largest commercial-to-residential ratio increase for the cities surveyed, rising from 10.27% to 3.07. Continuing the trend since 2015, the commercial valuation base again contracted year-on-year due to declining office valuations, while the residential valuation base experienced a notable 8% year-on-year increase driven by a burgeoning single-family home market. .
  • Halifax Halifax Municipality has made a positive change to the rate of taxation for 2021, but has reversed course for 2022. The Halifax Municipality increased the commercial tax rate and lowered the residential tax rate, resulting in the commercial and residential tax rates he rising 7.16% to 3.06.
  • edmonton Faced with pressure similar to Calgary as a result of its latest reassessment, its ratio increased by 6.5% to 2.68.
  • Vancouver Both residential and commercial tax rates declined, reporting the lowest tax rates of any city surveyed. As the residential property tax rate fell further than the commercial tax rate, the commercial and residential property tax rate rose by 1.35% to 3.46, making him the third highest among all cities surveyed. became.
  • Quebec City It was above average for the first time in 2013 and will continue to be well above average in 2022 with a ratio of 3.51.
  • montreal has reduced both residential and commercial tax rates in 2022, but a significant reduction in residential tax rates has seen the ratio rise by 1.08% to 4.21, the highest commercial and residential tax rates of all cities surveyed. The four-year trend of recording The city will face pressure to further increase the commercial tax rate on housing as valuations are expected to change in the role of the 2023 Triennale.
  • Ottawa As a result of increasing commercial rates by a greater percentage than residential rates, the rate increased by 0.95% for the first time since 2017 and is now just below the national average of 2.39.
  • Saskatoon When Regina The six-year trend of recording ratios below 2.0 continued, and remained static at 1.61 and 1.51 respectively between 2021 and 2022, the lowest in the survey. Yes, the values ​​have not changed.
  • WinnipegThe ratio has dropped slightly from 1.93 to 1.92, but is over 2.20 after accounting for school rebates and business taxes. School rebates are expected to increase in 2023, further widening the gap between commercial and residence taxes.
  • Toronto We continued to move towards tax equity, raising the tax rate on residential property by a higher percentage than on commercial property. As a result, the commercial-to-residential ratio continued its 18-year downward trend, falling by 2.42%. This is the largest reduction in the survey.

tax relief tools

A new report for 2022 highlights tax relief tools currently implemented or proposed across the cities surveyed. In response to sudden or significant increases in the tax burden, or for other policy reasons, state or local governments may implement certain actions, such as grading, tax rate adjustments, capping or rebate programs, to reduce segment can affect the amount of tax you pay. of properties. The challenge with tax relief tools is that for every profitable asset another asset must subsidize those profits.

Copy Altus Group 2022 Canadian Property Tax Rate Benchmark Report You can download it from:

About Altus Group

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Major Canadian cities continue to struggle to balance burdens between commercial and resident taxpayers, The Canadian Business Journal

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