Making the grade on property tax policies

Look out! The two-year freeze on Ontario property value assessments ends in 2008. 

With a provincial election coming – save the date: October 10, 2007 – here’s a heads-up on the government’s plans and what the other major parties propose. And to prepare you for those politicians knocking at the door, we’ve asked the Coalition After Property Tax Reform to grade the plans for fairness. CAPTR is an umbrella group of more than 700 Ontario ratepayers’ associations, including the Federation of Ontario Cottagers’ Associations and WRAFT, as well as two major seniors’ organizations.

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Liberal

  • A four-year property value assessment cycle, starting with the 2009 tax year, based on current value assessment as of Jan. 1, 2008.
  • New increases to be phased in over that four-year period, until the next assessment (2012). For example, if your assessment goes up by $20,000, it will be phased in as $5,000 more each year for four years.
  • If your cottage value comes out lower in the next assessment, your entire decrease will be implemented immediately.
What CAPTR has to say:
  • A band-aid solution with no long-term security
  • Just makes taxes more predictable for four years before the next market-based assessment

GRADE: D

 

PC

  • A five per cent annual cap on property assessment increases for as long as you own your cottage. This would also apply if the property is transferred from one spouse to another (but not from parents to kids).
  • Once you sell, any built-up value comes into play and new owners will be assessed at whatever the cottage is worth in the market at the time of the sale.
What CAPTR has to say:
  • We’re very supportive of this plan; it’s what we’ve been lobbying for
  • Deals with the volatility of the market and provides a long-term safety net for owners

GRADE: A

 

NDP

  • A “freeze till sale” assessment model, where assessments are frozen at their value as of Jan. 1, 2005, the date of the last assessment, until the cottage changes hands.
  • If you spend more than $40,000 on renovations, the freeze comes off and you’re open to reassessment.
  • Creation of an optional seasonal-property tax class, where cottagers only pay a percentage of the taxes local residents pay.
What CAPTR has to say:
  • Kudos to the party for setting up a task force to deal with the issue
  • It would be difficult to deal with the freeze over time
  • The seasonal-property tax class would be a plus for cottagers
  • As with the PC plan, a long-term property owner would have a huge advantage over a new buyer

GRADE: B-

 

Green

  • Replace the market-value property tax, where most of the value is based on the building, with a “location-value” tax, where lot size and location determine the value.
  • Land tax would encourage greater density in cities, while discouraging speculation in cottage country, where cottages would be taxed at close to existing tax rates.
  • Cottages could be improved with no effect on tax rates.
What CAPTR has to say:
  • Land value is already a big part of the current assessment system, especially for waterfront properties.
  • Speculation would not decrease: High waterfront tax rates would continue to drive cottagers and lot owners off their properties or force them to sell and subdivide, encouraging infilling and higher densities in these sensitive areas.

GRADE: D

 

Resources:

Coalition After Property Tax Reform
www.captr.org

Federation of Ontario Cottagers’ Associations
www.foca.on.ca

Waterfront Ratepayers After Fair Taxation
www.wraft.com

 

Related articles on cottagelife.com:

Cottagers and Tax Hikes

Tax Sales and Cheap Cottage Land

 

 

Published in the June 2007 issue of Cottage Life magazine.

Copyright © 2007 by Cottage Life. All rights reserved. Reproduction of any article, photograph, or artwork, for other than personal use, in whole or in part, without the written permission of the publisher is strictly forbidden.