FREDERICTON – The New Brunswick Real Estate Association (NBREA) says the provincial government isn’t going far enough to address property tax fairness by focusing only on what went wrong with property assessments.
“The property assessments issue is only part of the larger problem of property tax fairness in New Brunswick,” said Kari McBride, head of the Government Relations Committee of NBREA in a release. “Current property tax policies are unreasonable and unfair. They are certainly holding back investment in New Brunswick and punishing those who own or lease commercial space. The time to address the profound flaws in the system is now.”
The association is calling for the creation of a task force that includes major stakeholders in the property tax system with a mandate to recommend how it can be transformed into something fair and equitable. They say the ongoing property assessment issue underscores problems with the province’s Property Transfer Tax, which requires that this tax be paid based on either the actual sale price or the assessed value, whichever is higher.
“If thousands of assessments are wrong, that means thousands of people and businesses in New Brunswick may have unfairly paid too much transfer tax,” said McBride. “That would not happen if the government simply levied the tax based on the actual sale price of the property, not someone’s arbitrary estimate of its value.”
According to NBREA research, 55 per cent of all property transactions in 2016 in the Moncton area sold for less than the assessed value. But under the current rules, these buyers were charged the Transfer Tax on the assessed value. To make the system fair, NBREA has recommended policy changes to the way assessments are handled:
- When a residential property is sold, the amount it actually sells for should be the assessed value base going forward (if it sells in 2017, that sold value is assessed value in 2018).
- For each year after, increases should be tied to either the annual cost-of-living increase or the change in the average MLS residential market price.
- If the property has not sold within a 7-year period, a visual inspection should be required.
The NBREA has also outlined to the provincial government several other property tax issues that are adversely affecting economic development in the province, particularly the provincial levy applied to non-owner occupied properties.
“This is double taxation. Property owners who chose to invest pay twice for exactly the same services and infrastructure as those who buy and live on their property. New Brunswick is the only province that has double taxation, and it is a deterrent to anyone wanting to invest in our province,” said McBride.
New Brunswickers also pay some of the highest rates of property tax in Canada.
“As the research by Real Property Canada shows, a business in New Brunswick pays more per $100,000 assessment than a business in Toronto, Montreal or Vancouver,” said McBride. “Is that fair property taxation?”