Monday, December 6

Posthaste: Why moving out of the city will be more expensive than some pandemic homebuyers thought

Good Morning!

So you want to move to an idyllic country spot to work remotely or you can’t stomach big city prices and a smaller centre is a better fit for your budget.

Over the past 18 months many have done just that, creating a historic pandemic housing boom in smaller cities and towns.

But before you consider it, you might want to think about this.

After budgeting for down payment, real estate fees and mortgage payments, homebuyers may be overlooking one expense that could cost them thousands more per year: property tax.

Online realtor Zoocasa released a study This week that compares 2021 property tax rates for 35 Ontario municipalities. Their research calculates how much homeowners would pay in taxes in each for homes worth $500,000, $750,000, $1 million, and $1.5 million.

The results may surprise you — or maybe not, if you are already living it. For while housing in smaller centres comes with a lower price tag, property taxes are often higher, much higher.

Property tax rates vary across the province. Larger cities can afford to offer lower rates because they have more taxpayers and higher real estate prices. Smaller municipalities often have to impose higher rates because they have fewer resources to draw on.

Zoocasa found that the five lowest tax rates are all in the heavily populated Greater Toronto area.

  • Toronto: 0.611013%
  • Markham: 0.632908%
  • Richmond Hill: 0.659549%
  • Vaughan: 0.669976%
  • Milton: 0.683333%

The five highest, except for Windsor, are all located in northern Ontario.

  • Windsor: 1.818668%
  • Thunder Bay: 1.59108%
  • Sault Ste. Marie: 1.588067%
  • North Bay: 1.568182%
  • Sudbury: 1.546783%

A Toronto homeowner, therefore, with a property valued at $500,000 would pay $3,055.07 in property taxes, while a house in Windsor of the same value would have a tax bill of $9,093.34, said Zoocasa.

Of course, half a million buys a lot more house in Windsor than it does in Toronto.

But even retreats within the Golden Horseshoe where home prices have soared carry a heftier tax rate. Barrie, for example, where the average home price has shot up to almost $780,000 in the pandemic has a tax rate of 1.218959%. In Whitby where home prices are over $1.1 million the rate is 1.122891%, and Orangeville and Cambridge, with homes in the high $700,000s have rates at 1.333837% and 1.18633%, respectively.

But here’s why pandemic homebuyers really need to pay attention to property taxes.

The Municipal Property Assessment Corporation (MPAC), which determines the value of your home every four years, was due to update assessments in 2020. Instead, because of the economic uncertainty of the pandemic, it opted to freeze assessments at 2016 levels until 2024, giving Ontario homeowners a tax reprieve.

“However, as Ontario home prices saw unprecedented growth over the last year – the benchmark home value for the province rose 19.7% between September 2020 and 2021, with the average property selling for more than $1 million in many local markets – it’s important for homeowners to be aware of how their value assessments may change over the coming years,” said Zoocasa.


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