Alternate Property Tax Model

So after whining about my Property Tax bill, I think I have come up with a simple(r) model for Property Tax valuations which could make lives simpler (simpler for me). Remember that Property Tax is a Wealth Tax, taxing the apparent value of your house.

Simply put, your Property Tax is set when you buy your house. When the price is set, that is what your property taxes will be based on, until the house is sold again. It no longer is a wealth tax or a perceived value tax.

Sounds easy doesn’t it? The municipalities could tweak it so that they could add an inflationary increase each year, so that their incomes could slowly increase. Maybe a check on the valuation at sale (i.e. the City can have an independent body valuate the house at sale time and then base property taxes on that value), in case folks try to sell houses for $1 or the like.

Advantages?

• Property tax increases would be limited year over year to only an inflationary increase. Currently in Ottawa Property Tax has been going up higher than inflation in terms of percentage of perceived value.
• If someone stays in their house for a long period of time, they will not end up having to sell their house because their neighbourhood suddenly went “up scale” and their Property Taxes have sky rocketed (as in Vancouver), good for Fixed Income seniors.
• May cause a boom in contracting work for upgrading houses, since it’s value will not increase unless it is sold (i.e. why move to a bigger house, when it ends up being cheaper to add a room to my current home)
• Less yearly paper work with new valuations and warning home owners of the pending change.

Disadvantages?

• Municipalities incomes may not be as large as they need them to be and it may force them to cut services (to run a balanced budget)
• Tom-foolery and shenanigans are still possible given there can be manipulations of these systems, like we have seen with rent controlled properties and such.
• Might throw cold water on the housing market, with folks maybe staying in an older house, instead of buying a brand spanking new one, because it costs more (and the older house has been inhabited in for a while)

Opinions? Should I write this one up and present it to the Ottawa City Council as a progressive and exciting way to move forward in the 21st century? Maybe if I add a Green element to it, it might be an easier sell (it will help the environment, because it will slow housing developments)?

Rewritten from an article in 2010.

The post Property Tax Alternative appeared first on Canadian Personal Finance Blog

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By: bigcajunman
Title: Property Tax Alternative
Sourced From: feedproxy.google.com/~r/CanadianFinancialStuff/~3/mlOKOz7aB9I/
Published Date: Thu, 18 Mar 2021 17:19:00 +0000

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