Taxes
Vancouver has low property taxes and high income taxes. Seattle is the opposite. What would it look like if British Columbia was more like Washington State? If we got rid of personal provincial income tax and recovered the revenue by raising the provincial portion of the residential property tax, a.k.a. the “school tax”.
The tax policy of British Columbia, when compared to Washington, is sending the message that it’s a great place to come and invest in property with it’s low property tax rate, but not such a great place to live and work with it’s higher income tax rate.
We have written about the extra school tax before, but in the meantime the discussion about the extra school tax has heated up considerably, cumulating in David Eby cancelling his town hall today. Over the years I also have been spending some time thinking about how people got to the privilege of paying the extra school tax, for example here and here.
There is a slight dissonance with people claiming that their homes should not be taxed because they are their homes and not their investment.
The new BC provincial budget had lots of interesting changes. One of them is the additional school tax on residential properties, charged at a rate of 2 basis points (0.002) of the assessed value above $3M and an additional 2 basis points of the assessed value above $4M.
After some initial confusion the province clarified that this tax will not to apply to purpose built rental buildings, each of which is typically one single taxable property, which can easily breach the $3M threshold for multi-unit buildings.
The property tax data for the City of Vancouver has been available for a while now, and with new assessment data becoming available soon everyone’s worried about what their property taxes will look like. The City just passed a 3.9% increase in their budget, so on average everyone will pay 3.9% more taxes than they did last year.
The exact change in property taxes varies from property to property. There is a nice overview on how this works in general, for the City of Vancouver there is an added complication of land value averaging meant to soften sudden land value increases, that effectively serves to lower taxes for single family homeowners in a rising market.
A couple of weeks ago I started thinking about secondary suites, laneway houses and taxes in the City of Vancouver. The number of secondary suites and laneway houses has been continuously growing. Rental income is probably one of the main reasons people choose to activate a secondary suite. What are the tax implications?
Secondary Suites How many secondary suites are out there? Nobody really knows, but we have some estimates.
