Monday, June 16, 2008

Tax On Rental Properties 'unfair' to Tenants

Research shows that adding tax to rental properties makes rents higher.

New Brunswick is the only province that adds an extra tax to rental properties, an idea that was once supported because it was seen as a target on rich landlords who could afford to pay. But property rental is a business, and like any business it passes its costs on to its customers, who in this case are tenants.

In most places property taxes are controlled by municipalities. Some cities, such as Toronto, raise property taxes 3.5 times on rental units over what a home owner pays. The municipalities then argue they can't reduce the differential without having to raise taxes on single-family homes because they need the money. The situation is not as bad in New Brunswick since the tax goes into provincial coffers and the province has the ability to tax a number of things, so it has many ways to make up the difference.

For the average tenant, if the tax rates were equalized, rents would go down by $45 to $50 a month.

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