There has been some recent discussion in the Halifax Council of the idea of removing the provincial assessment cap for annual property taxes. As a result I thought now would be the perfect time to review the cap, and some other details about property taxes in HRM that you should know, if you own, or are looking to buy a home in the area.
What is the Provincial Assessment Cap?
In short the provincial assessment cap for property taxes was put into place in order to make property tax increases more predictable. Without the cap property taxes were based on the assessed value of the property. This meant that when there were large increases in the value of homes on the market, the property taxes for those properties would increase by a lot. Many home owners found this hard to manage, because of the unpredictable nature of the increases. So, the cap was instituted to avoid those drastic changes. Now, under the assessment cap, property taxes on qualifying properties can only increase annually at the same rate as the Consumer Price Index in Nova Scotia. When a property is sold to a new owner the cap is adjusted to the current market assessment, so the purchaser should expect that the property taxes may jump from what the previous owners were paying.
Deed Transfer Tax
The Deed Transfer Tax is a lump sum tax that is charged at the time you purchase a property in Nova Scotia. You must pay this tax when you register the deed to transfer title of the property to the new owners. This tax is levied by the municipality where the property is located. It varies between 0 and 1.5% of the purchase price of the property, depending on which municipality is charging the tax. In Halifax Regional Municipality the Deed Transfer Tax is 1.5% of the purchase price. This is something that you should consider when working out how much you will need in the way of "closing costs" when buying your home. For example if you are buying a $350,000.00 home in HRM, you will have to account for $5,250.00 in Deed Transfer Tax on closing. It is important to note that in most cases this amount does not come out of your mortgage funds, so you will be required to provide this amount to your lawyer prior to closing day.
There are a lot of things to consider when you decide to buy a home, sometimes it can be overwhelming. If you have any questions about making this decision we offer a flat fee consultation service. You can come to chat and ask questions. We'll give you some advice about your options and what your next steps might be. There is no commitment after the consult. If you have decided to go ahead with a purchase, and wish to retain us we would love to work with you. You can find our information at : www.highlanderlaw.ca.
By: Briana C. O'Grady, J.D.
Halifax Tax Page: https://www.halifax.ca/home-property/property-taxes
Consumer Price Index: https://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/cpis01d-eng.htm
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