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This month, Ottawa’s city council is scheduled to debate if multi-residential property owners should continue to pay a higher property tax rate than single-dwelling homeowners.
The imposition of the different tax rate is unfair to landlords and especially renters. Right now, owners of multiple dwelling homes, defined as properties with more than six units, pay 1.7-per-cent municipal property tax, which is 70 per cent higher than what other homeowners pay. Despite protests from renters, landlords and councillors Diane Holmes and Alex Cullen, the city’s audit, budget and finance committee ruled that multi-residential properties should continue to pay the higher tax rate. While it’s true that on average multi-unit houses generate more profits than single unit homes for rent, landlords usually pass the cost on to tenants because property tax is exempt under rent control laws. Property taxes can make up to 20 per cent of a renter’s bill, according to Ottawa group Tenants and Landlords for Fair Taxation. While the city has lowered the multi-unit tax rate from about 2.3 in 2000 to 1.7 in 2009, part of the committee’s reluctance to continue lowering rates is because lowering or equalizing rates for multi-unit residents would mean an increase in taxes for single-unit property owners. Cullen says, quite rightly, that the rise in property taxes for single dwelling homeowners is a small price to pay for fairness. According to the 2006 census, Ottawa has about twice as many homeowners as renters. The average household income for renters is $44,863, whereas homeowners make an average salary of $105,259. To make renters in multi-unit homes pay a higher tax rate is just not fair. Furthermore, property tax is calculated by multiplying the assessed value of a home with the property tax rate. Since multi-unit residences are sometimes valued higher than single-unit homes of similar size, age and location, this is akin to gouging landlords. But given that there are more homeowners than renters in Ottawa, it is very likely that councillors in areas with fewer renters are looking at the numbers and deciding to swallow any arguments about fairness and focus instead of keeping the peace with their electorate. They should have more of a backbone and do what is right, not just what is politically convenient. Councillors who don’t agree with reducing the rate often say that Ottawa has one of the lowest multi-unit residential tax rates in Canada. This is true, but it still does not make it fair or equal. Furthermore, since 2001 the city has charged owners of new multi-residential properties the same tax rate as single-unit properties. This creates a two-tiered system in taxing multi-unit properties, with owners (and renters) of older multi-unit residences paying a higher rate than those of new properties. If the tax rate is lowered for multi-unit residences and prices are equalized, landlords still may not pass on the savings to renters. While equalizing the rate is reason enough to lower the tax rate, there should also be consideration given to taking away the property tax exemption that landlords currently enjoy so renters will benefit from the reduction of the rate. On April 14, city council should do what’s fair and lower the property tax rate for multi-unit residences. Last update : 09-04-2010 10:59
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