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Canajun Finances Home » Property Taxes: A Stream of Consciousness

Property Taxes: A Stream of Consciousness

Wrote this rant about property taxes in 2010. Property taxes continue to leech money as my house goes up in value (allegedly). When folks talk about taxing the rich, remember, your house is pretty valuable. Maybe in their eyes, you are rich?

Property taxes time is a magical time, just for the sheer volume of money that seems to go for taxes.

First we have the CRA and Income Tax coming due in April, which causes lots of excitement as I mentioned in How Do You Do Your Taxes ? I am happy to say that this part of the Magical Tax Mystery Tour is over, with my E-filing this past weekend. I like to get those in early, especially when the government owes me money. Even if you owe them money, you don’t have to pay until the last possible day.

The second exciting part of this Tax Trek is Property Taxes that I owe to the City of Ottawa. Ottawa’s system has a couple of ways you can pay. I choose to make the two payments in March and May. You can pay monthly if you wish as well. This makes for the right hook portion of the tax combination punch I receive this time of year.

Property taxes have continually gone up since I started owning a house about 27 years ago. This as various levels of Government off-load their own service load and down load them to the municipal governments. The City of Ottawa is an interesting story all on its own with Amalgamation (2001). The fact that the City of Ottawa keeps growing and thus its thirst for Tax Funds is never quite satiated.

I seem to live in my finances in this time of year. I always end up noticing interesting points that these taxes bring into focus for me:

  • Paying more in Property Taxes than I do in Mortgage Interest on my house. I guess this is a good thing, but this may change when interest rates go up.
  • With Income Tax there is always a chance that I will get a refund from the Government. This will never happen with my Property Taxes. This explains why I seem to loathe Property Taxes more than Income Taxes.
  • Property Taxes are the only tax on the Perceived Value of something, as opposed to actual value or income. If I sold my house for $1 tomorrow, but the City said it was in fact really worth $1,000,000.00 they would be right and that would be what the new owner of my house’s valuation would be. Many people successfully argue that their property valuation was too high, but it is a tedious and slow process. There is a chance your valuation may go up if you appeal.
  • If I wanted to pay more Property Tax, in exchange for more services (say better street lighting, better sewers or a fire hydrant near-by)it is not possible. There is no way for me to buy these service improvements from a private firm either (given the city has a monopoly on these services).
  • Even though a portion of my property taxes goes to the School board of my choice, this does not guarantee my child an education with that board. If they feel my child is not suited to their service (behavioral, or because they have a learning disability or other reasons) they can refuse me this service, and I have little recourse (but I still must pay the fees). That one is always an interesting discussion point to bring up at a party that seems to be too quiet.

I don’t think there is anything too deep in those points, just some stuff I noticed about my property tax bill.

Feel Free to Comment

  1. What I don’t like: being forced to pay the educational portion of the property tax even if kids go to private school

  2. The Personal Finance Blog

    I find it hard to believe that in the middle of this financial crisis, house values in your area have not been negatively impacted (or remained stagnant). It’s becoming more and more prevalent here in the U.S. to see people challenge their property’s valuation and end up paying less in property taxes because the property lost some of its value.

  3. Ray, don’t fool yourself. You pay property tax, it’s just rolled into your rent. I would imagine that at $12k/year you are probably living in a home much smaller than most people with comparable income would choose. Good on you, but your post is another one of the false comparisons between owning and renting – you don’t pay less because you rent, you pay less because you live below your means.

    For me, the terms of my mortgage require me to pay installments to the bank with every mortgage payment, and they then worry about sending the money to the city. This is a bad deal, on the whole, since the balance of my property tax account neither earns interest nor reduces my mortgage balance, but it’s how it is. Amongst the reasons that I will be moving my business elsewhere when my current term expires.

    People always complain about property taxes always going up, but of course, they have to. Income taxes get more revenue as incomes go up, but property taxes do not automatically get more revenue when housing prices go up. It’s a little silly, really, and creates endlessly poor public relations for city councils.

  4. I feel your pain. Jan to June, when the final Property Tax payment comes due (if you’re splitting the payment in two) are always tough months financially for me as well.

    Not only is there income tax filing* to worry about, but as of Jan, we also have to start paying CPP and EI again, so net pay goes down. Then, there are also two property tax payments due in that same period for our second residence. (yes, I know that I’m complaining and yet can afford a second residence**) It’s a tight time of year, yet we manage to get through it somehow.

    *My spouse’s boss, a small business owner, is very lax with his accounting/payroll practices. pay stubs are not always issued and when they are, do not contain cumulative amounts. This is illegal, but there is only so much one can say/do in such a situation if one is not the offended party. Thus, this time of year becomes stressful, because we want to be sure that enough goes into RRSP’s to avoid giving any more than necessary to governments.

    **We’re not rich. We’re in this financial position because we have been careful with our money choices and have made sacrifices.

  5. Thanks for sharing this. As a guy who rents and will never buy a house ever, I find it fascinating to learn about Property Taxes. My total housing costs per year is $12,000 all in, everything. The fact that so many people pay Property Taxes for me and that they are even more than their Mortgage Interest (which I also don’t pay), constantly go up, and that they are based on perceived value and pay for my kids schooling is quite interesting. After rent my wife and I have $143k/year left and we sometimes feel a little guilty for not contributing. Thanks for owning!

    1. Someone pays it, be it your landlord, who takes it out of your rent, or an owner like me. You are paying it, it is just well hidden in your rental charges. As for the Rent or Own thing, an interesting discussion too, have to have that one soon.

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