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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June 2nd, 2008 at 1:13 pm
June 2nd, 2008 at 1:38 pm
June 2nd, 2008 at 1:51 pm
Time to sell.
June 2nd, 2008 at 2:28 pm
June 2nd, 2008 at 2:39 pm
I’ve dumped my analysis up on http://vancouverhousingcrash.com
June 2nd, 2008 at 2:40 pm
“Study shows formerly overvalued markets in California, Nevada and Arizona are seeing prices come down substantially”
Krissh Krassh, Rob…..
Yeah I know, they don’t have the Olympics.
http://money.cnn.com/2008/06/0.....2008060217
Also shouldn’t you be specuvesting in this market?
Big returns!!
http://www.busrep.co.za/index......Id=4430208
Iran’s housing prices turn many into millionaires, others into paupers
Why mess around with the Vancouer Market.
“I am a millionaire because of this apartment,” says Ehteshami, an interior designer from a rich Iranian family who has always lived in an affluent northern Tehran neighbourhood.
June 2nd, 2008 at 3:25 pm
“it’s hard to ‘go back’ [to] renting.”
I can understand some of the reasons to own. But the fact is I’d rather be inconvenienced by a few years of renting, pocket a few hundred thousand dollars and either buy a bigger house in a few years, just have some really good times with the money or invest it for the future. We’re not talking chump change here, even after selling, moving, renting and buying again we’re talking about AT LEAST half the value of your home left over if you rent and buy something equivalent.
A friend of mine sold her house for about 1.5m last spring, went for a trip around the world and is currently renting. Due to some good/lucky investment decisions her savings have gone up in spite of it all. In three or four years she can buy a really nice house and still have enough to put all of her kids through college and retire in style. I’d call being inconvenienced with renting a pretty good trade-off for all that!
June 2nd, 2008 at 4:41 pm
Thanks for your analysis.
but how did you get this number?
Mortgage Interest: $2,690
June 2nd, 2008 at 4:48 pm
http://www.greaterfool.ca/
Don’t miss, this opportunity, buy one and get one free, I’m not kidding you.
June 2nd, 2008 at 6:06 pm
The reason for SFH taxes going up is that land values, which comprise a much greater proportion of market price for SFH, have been responsible for most of the runup in prices.
Remember that condo is a form of title, not type of building. You can have a condo duplex or a single titled duplex for example, and it would not make a whole lot of sense, nor would it be fair, to have two different tax rates for them. Form of title should be tax neutral.
June 2nd, 2008 at 6:52 pm
June 2nd, 2008 at 7:00 pm
June 2nd, 2008 at 7:17 pm
June 2nd, 2008 at 8:16 pm
No?
I rent my $X00K of investments out at 6%+, while a homeowner rents out his investment (in the case of an occupier, to himself) for less than half that.
Oh most of those homeowners are renting money from people like me too.
I also think the homeowners are headed for a big capital loss and I’m not, but we shall see.
Who’s getting rich?
June 2nd, 2008 at 8:31 pm
June 2nd, 2008 at 8:33 pm
June 2nd, 2008 at 8:42 pm
June 2nd, 2008 at 8:49 pm
Yeah, the Brits and the Yankees had a housing bubble on their hands and didn’t see it.
If we had a housing bubble our experts would have warned us, not like that David Lereah of the NAR who wrote a book claiming the boom would last until 2010 and then prices would just moderate.
June 2nd, 2008 at 9:12 pm
an erudite satv!! waahahahaha!
June 2nd, 2008 at 9:42 pm
I feel really sorry for this guy.
June 2nd, 2008 at 9:46 pm
http://www.bobtruman.com/Edmon.....18017.html
Meanwhile CMHC and the banks are still predicting prices to rise in 2008. Gotta love em.
June 2nd, 2008 at 10:30 pm
The sad thing I believe is that this guy has two homes
June 3rd, 2008 at 12:37 am
June 3rd, 2008 at 5:32 am
June 3rd, 2008 at 6:03 am
This is exactly what happened in the crash of 1981-83.
Property taxes do not depend on assessments. They equal budgeted local government spending.Assessments only determine the allocation of taxes among properties.
During a time of price rises or declines, the market value of a particular property may change more or less than the average. This will be reflected in the tax bill. But the average change in taxes over all properties will be the same as the change in local budgets.
A lady I know in Burnaby who owns a 50’s single title duplex just told me her taxes are going down this year. It works both ways in both directions.
June 3rd, 2008 at 6:23 am
June 3rd, 2008 at 7:40 am
1. I’m not sure why this is “news”. Must be a slow day. I’m pretty sure the city (Vancouver anyway) announced a bigger budget a while back, and I received my assessment about a month ago.
2. Its a condo, up somewhere over 10%. There is a more detailed breakdown of the charges. If anyone’s interested I will reprint them here. I saved $17 or something thanks to the months-long garbage strike(!!). However its a rental unit and the garbage is picked up privately, so why I even pay is another argument.
3. Correct that prop tax is based on land values. However my “building” value has also been increasing rather rapidly in the past few years. Based on comments here and elsewhere it should depreciate, so I don’t know what to make of that.
4. All of you renter-investors, where are you putting your money? I’ll agree rental yields are typically crap here and now, but the stock market is not a money tree either. I ask because I’m renting my residence but still hanging on to my rental property for cashflow. 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.
I invest my savings now, but a few hundred or a thousand here and there is a lot less stressful to think about.
June 3rd, 2008 at 8:11 am
“garbage is picked up privately, so why I even pay is another argument.”
Well for one you still have access to public garbage cans on the streets and in parks don’t you?
“However my “building” value has also been increasing rather rapidly in the past few years. Based on comments here and elsewhere it should depreciate, so I don’t know what to make of that.”
I don’t think anyone here has said, “condos always depreciate” What most people here say is they depreciate in a NORMAL market. In a bubble they will appreciate as long as the bubble is going on then crash hard.
“I could cash out with a few hundred K”
Maybe you could, I think you’re approaching the Rubicon pretty rapidly. Unfortunately for you it’s next to impossible to guess when you’ve actually crossed the river and it’s slash prices or enjoy the ride. Have you looked at the inventory lately?
June 3rd, 2008 at 8:14 am
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.
June 3rd, 2008 at 8:18 am
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.
June 3rd, 2008 at 8:20 am
That being said, I’m current over-invested in real estate with my rental, so I’m not investing in anything RE related.
June 3rd, 2008 at 9:00 am
Watcha think?
June 3rd, 2008 at 9:11 am
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.
June 3rd, 2008 at 9:18 am
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 the next 5-10 years.
June 3rd, 2008 at 9:26 am
June 3rd, 2008 at 9:56 am
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.
June 3rd, 2008 at 9:56 am
Until…
http://tinyurl.com/4fjxm8
June 3rd, 2008 at 10:29 am
Not me. I’d gladly give back $100 for immediately scrapping the so-called “Carbon tax” any day.
my 0.03 (inflation ya know)
June 3rd, 2008 at 10:33 am
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.
June 3rd, 2008 at 11:29 am
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.
June 3rd, 2008 at 12:38 pm
June 3rd, 2008 at 1:32 pm
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.
June 3rd, 2008 at 2:38 pm
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.
June 3rd, 2008 at 2:50 pm
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.
June 3rd, 2008 at 6:31 pm
Grow-op or bawdy house? That’s the only way you can get that kind of yield.
June 3rd, 2008 at 7:33 pm
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 order to curb a phantom problem. I don’t think most people get it, a carbon tax is a tax on all life.
June 3rd, 2008 at 9:13 pm
Here are some more details: http://financialjungle.com/200.....ess-story/
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.
June 3rd, 2008 at 9:47 pm
June 4th, 2008 at 5:47 am
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.
June 4th, 2008 at 2:03 pm
Sure it does make sense.
June 9th, 2008 at 8:10 pm
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 taxes and share the burden, I’m sure glad to live here.
I’m not planning to move anytime soon, so I hope the next buyer in the neigborhood brings a low enough offer to restore my homeowner grant!
June 10th, 2008 at 1:00 am
June 14th, 2008 at 10:52 am