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Canadian Property Tax Rate Benchmark Report 2020

Over the last 17 years, we have benchmarked and analyzed property tax rates of major urban centres across Canada to identify the ratios of tax rates between commercial and residential properties.

Property tax is the main source of revenue for Canadian municipalities and is used to fund services such as road repair, education, recreational programs and public transit. Both residents and business owners pay property taxes, but the rate they pay varies depending on whether the property type is commercial or residential – taxing authorities set these rates at their discretion.

The issue and subsequent argument that arises is the perceived fairness of the different property tax rates paid between commercial and residential taxpayers, and who should proportionally fund more, or less for education and municipal services – businesses or residents.

The findings of this report are used by Altus Group and REALPAC to create dialogue with taxing authorities about tax fairness, influence public policy and promote a healthy and competitive business environment for the real estate sector.

“What’s fair?”

The case for lower commercial property tax rates

High commercial property taxes place a greater weight on businesses to contribute an unequitable share of municipal and education budgets.

While every homeowner would appreciate paying less property tax, it is important to balance the burden paid by businesses in each city. Lower commercial property taxes help make cities more competitive and promote job growth.

With the likely economic impacts of the Covid-19 pandemic having lasting effects on municipal and provincial budgets and financing, it has never been more important for governments to maintain healthy and predictable tax rates. We commend governments across the country for their early and continuing commitments to tax fairness during the pandemic, including deferral programs and payment forgiveness. We encourage municipalities going forward to limit the commercial-to-residential property tax ratio to a maximum of 2 to 1, avoiding the temptation to burden businesses alone with deficits.
Michael Brooks

CEO, REALPAC

Vancouver

Vancouver posted the largest decrease in the commercial-to-residential tax ratio (-36.84%) of all 11 cities surveyed.

Calgary

Calgary saw the second largest ratio decrease of all 11 cities at -22.05%, ending a six-year trend of consecutive increases.

Montreal

For the second consecutive year, Montreal has remained the city with the highest ratio, currently sitting at 4.11

Commercial-to-residential tax ratios of major urban centres across Canada

Commercial-to-residential property tax ratios compare the commercial tax rate versus the residential tax rate. For example, if the ratio is 2.50, this means that the commercial tax rate is two-and-a-half times (2.5x) the residential tax rate.

Therefore, a commercial property valued at $1 million dollars would incur property taxes 2.5 times higher than an equally valued residential property.

The map shows the 11 cities surveyed and their respective commercial-to-residential ratios. In 5 out of 11 municipalities across Canada, commercial tax rates are at least 2.5 times greater than residential tax rates.

Download the 2020 Canadian Property Tax Rate Benchmark Report today

What’s inside:

  • 2020 commercial-to-residential tax ratios
  • 2020 commercial rates
  • 2020 residential rates
  • 2003 – 2020 trend analysis
  • 2020 municipal vs. provincial ratio trends

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