Property tax on single family homes up

From todays Vancouver Province, higher assessments on some single family homes leads to a jump in property tax bills:

Mario Tomsich is one of thousands of single-family Vancouver homeowners whose property taxes have surged an average of 14.2 per cent, seven times the rate of inflation.

“The taxes are just skyrocketing because of the value of the property,” the 75-year-old Vancouver landlord said yesterday. “If it keeps going like this, I would have to do something about it. People have been forced to sell their homes.”

Vancouver budget director Annette Klein said the 1.23-per-cent tax increase approved by city council was not reflected for single-family dwellings because their assessed values shot up 30 per cent.

They jumped 15 per cent above the average for the residential class, including condos. Property taxes are based on assessed values.

“Single-family homes are picking up more of the overall [tax] revenue,” Klein said. “They are compensating for slower growth in condos.”

This is the first I’ve heard of slower growth in condo property tax – is there an imbalance in the system and should we expect higher tax rates on condos in the future?

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cornerstone
12 years ago

Hopefully we'll see a drop next year, I had about $2100 to pay before the basic grant was requested. I'm not looking to sell and there seem to be a heap of new high rises going up in this area so I have to imagine that demand will 1. drop prices a little and 2. stop too many more high rises going up.

95thPercentile
95thPercentile
12 years ago

My residence in the last post is a condo, not a house.

95thPercentile
95thPercentile
12 years ago

My property has supposedly appreciated more than average. My net property taxes increased 32% this year!! I went from claiming the entire $570 homeowner grant in 2007 to becoming completely ineligible for the grant in 2008, due to the increased value of the assessment. My gross taxes rose 20%. This is despite the 3-year averaging on land values. A neighbor sold near the peak of the market July 2007, and the new assessment value was pegged very close to that sale price. I say it was near the peak because another neighbor can't find a buyer at the same price today. All three of our units are assessed equally, which also seems accurate. I can't complain. The assessment process seems fair overall and I wouldn't to change a thing. When I hear how California and other states determine annual property… Read more »

Anonymous
Anonymous
12 years ago

Ken, Thx

Sure it does make sense.

Warren
Warren
12 years ago

Assessed at $239,900 last year, I collected roughly $25k in rent. $19.4k after expenses, $13.6k after tax. That's a 5.6% after tax return.

I expect you to complain about the numbers next, but I'm certainly not going in to any more details. I'll leave it up to you to prove me wrong.

patriotz
patriotz
12 years ago

Warren, the only details that matter are the market price of the property and the market rent, and that article provides neither of them. You pony up those numbers (assessment will do for market price) if you want people to take you seriously.

Warren
Warren
12 years ago

patriotz,

Here are some more details: http://financialjungle.com/2007/10/31/housing/a-r

I'm tempted to share more specific financial details, but after all this is the interweb.

tn,

"Carbon tax is a tax on all life."

Well, our planet does have carbon based life forms, so you got me there. Good thing for you there's no tin foil hat tax. All I know is the $200 my girlfriend and I get will more than compensate for the carbon tax we have to pay, plus our personal tax rates are dropping.

tn
tn
12 years ago

"40Warren Says: +1 June 3rd, 2008 at 11:29 am realbiz, Anything to get idiots out of driving alone in their SUVs. I have zero sympathy for people who complain about high gas prices. At least I’m getting a part of the money they spend, instead of it all going to oil companies. The only sympathy I have is for families and lower income people, and that’s where the dividend helps. " you got to be kidding me you can't be a supporter of this ridiculous tax, that will do nothing to combat global warming, while directly leading to inflation that will effect all not just suv drivers. Plus don't get me started on global warming. It amazes me how there is a movement to reduct freedom worldwide and how so many otherwise reasonable people would like their freedom's reduces in… Read more »

patriotz
patriotz
12 years ago

Believe what you want. Its a special arrangement that I have commented on before.

Grow-op or bawdy house? That’s the only way you can get that kind of yield.

Ken Simpson
12 years ago

Anonymous: You asked how I got the mortgage interest of $2,690 per month for my post at http://vancouverhousingcrash.com?

I used the mortgage calculator at canadamortgage.com. It told me that I'd need to borrow $585,000 + $11,700 (mortgage insurance) for the $685K house with a $100K downpayment.

The hapless home debtors would face a monthly mortgage payment of $3,639. To find out how much of that is interest, I used canadamortgage.com's amortization calculator and found out that on the $585,000 + $11,700 mortgage at 5.49%, the debtor would pay out $32,105 in interest during the first year. That works out to $2,675 per month.

Oops, I was off by a few dollars! Not sure how that happened. Does my method for getting the interest paid make sense?

I'm interested in the analysis being correct.

Bubble Lad
Bubble Lad
12 years ago

Drachen

I LIVE IN THE SAME NEIGHBORHOOD AND NOTICED THE EXACT SAME THING! I've been absolutely flabergasted by the houses that are sitting empty and, in some cases, in absolute disrepair (on what is supposed to be multi-million dollar real estate). I was afraid to even mention them for fear of sounding nuts (I've received nothing but blank stares from most Vancouverites when I bring this up). I estimate about one every other block. There's one at Collingwood & 3rd (have to double check), that looks like no one has lived in it for a decade.

Drachen
Drachen
12 years ago

Bubble Lad

Who needs condos? There are 3 houses within a couple of blocks of me (desirable part of Kits, between 4th and Broadway) that are vacant and constantly getting broken into by vagrants. One was used several times for raves and now has plywood over all windows and doors (which was ripped down once and has since been replaced). Any of them if it sold today would be worth well over a million dollars.

Bubble Lad
Bubble Lad
12 years ago

At least the drug users went through the motions of renting the place. How long before all those half and quarter filled condos are full of people who just went around knocking and trying doornobs until they find one that's unnocupied and moving in because there's no one there to bother them, and not enough people on the floor to even notice their presence? I wonder if they saw the "condo lifestyle" posters first that are posted on "condohype '?!

Warren
Warren
12 years ago

realbiz,

Anything to get idiots out of driving alone in their SUVs. I have zero sympathy for people who complain about high gas prices. At least I'm getting a part of the money they spend, instead of it all going to oil companies. The only sympathy I have is for families and lower income people, and that's where the dividend helps.

patriotz,

Believe what you want. Its a special arrangement that I have commented on before.

patriotz
patriotz
12 years ago

Its mortgage free, and earning a net yield of 5% or so after tax and expenses, based on current value

That's saying that the apartment could be rented out for around 8% gross return on market price, which is a price/rent of 150.

Sorry, that is so far out of whack with the current market I can't buy that. That's about where we were in 2002 really.

realbiz
realbiz
12 years ago

Anyone excited about receiving $100 dividend tax refund from bc government at end of June?

Not me. I'd gladly give back $100 for immediately scrapping the so-called "Carbon tax" any day.

my 0.03 (inflation ya know)

Patiently Waiting
Patiently Waiting
12 years ago

Hey, if they're willing to pay $2000/month for a one-bedroom condo, than obviously a criminal record check isn't necessary.

Until…

http://tinyurl.com/4fjxm8

RJB
RJB
12 years ago

"All of you renter-investors, where are you putting your money?"

I have money in a lot of different stocks and mutual funds, but this is one that's done well for me over the past four years. I don't like the high MER.

Stone & Co. Div Growth Cls Canada-B

I'm considering the iShares Canadian large cap but haven't made a final decision yet.

Anonymouse
Anonymouse
12 years ago

I think this will end badly. I will be selling and buying cheese futures.

jesse
jesse
12 years ago

"I could cash out with a few hundred K (after some painful capital gains tax), but I’m nervous about where I’d put that pile of money to make it grow." There is nothing wrong with holding onto your investmnet property as long as you factor it will likely be worth less than what it is now in a few years' time. There is a lot of overhead and cost with selling and re-buying again however the money's on the table — take it or leave it because it won't be there in such an amount for a long time. You might consider spending time researching other investments instead of spending time maintaining your real estate investment. If you aren't sure what to do, I bet even a high interest savings account will have a better total return than RE over… Read more »

Patiently Waiting
Patiently Waiting
12 years ago

How did The Province find this Tomsich guy? He is hardly the poster boy for the campaign to lower property taxes. Maybe City Hall suggested him.

And he complains about a new bike lane, saying nobody rides bikes in Vancouver:

"But the city has no scruples. They keep building unnecessary things. They want to put another lane on the Burrard Bridge for cyclists for $40 million. How do you justify that? Not that many people ride bikes."

I wonder if he has two SUVs and a boat. He probably flies a few times a year. Old rich guys usually have Bigfoot-sized carbon footprints. We'll be paying for his excess long after he dies. At least City Hall can collect at that time.

Strataman
Strataman
12 years ago

Warren "All of you renter-investors, where are you putting your money? I’ll agree rental yields are typically crap here and now," In my case in a paid off property I have had for some 20 years which is where I will retire shortly. This year I am building a new livestock barn and putting in about 2000 meters of new fencing. Last year I did a new well and put in some solar back up cells to charge the 12 volt system. Next year I gotta put a new wharf in as the old pone is rotten.

Watcha think?

Warren
Warren
12 years ago

Thanks newguy. I have some diversified holdings in my RRSP and non-registered accounts. I'll freely admit its psychological fear. I'm much more comfortable with a dollar cost averaging approach that I'm doing now. Selling and investing would interrupt that with a giant buy.

That being said, I'm current over-invested in real estate with my rental, so I'm not investing in anything RE related.

Warren
Warren
12 years ago

Hi Drachen,

I do have access to public garbage, but I'd get fined if I put my home garbage in it. 🙂

Regarding selling, I really have no plans to, this is still a long term hold for me. Its mortgage free, and earning a net yield of 5% or so after tax and expenses, based on current value. Rare in this market, but I'm really not concerned about the capital value because I don't plan to sell, only the cash flow it provides.

newguy vancouver
newguy vancouver
12 years ago

Warren, I'm not going to give investment advice for particular equities, except to say to make sure you are adequately diversified. In another blog I wrote down my various holdings, and I'm sure it can be googled (I've done very well this year – but this is probably just luck more than skill).

What I will say is the beauty of investing is that the same principles apply regardless of the sum of money you have invested. Everything is relative. The same principles you use to invest $300k you can use for $3M.

Its more of a psychological fear issue, where people often say that they felt comfortable DIY-ing it with smaller sums, but there is no actual truth to that.