Comment 33613

By A Smith (anonymous) | Posted September 16, 2009 at 03:54:09

Reg >> But what about the people with money? You know, the urban hip, chic, the young and the restless, the ones who go to Toronto to spend their cash instead of in their own bloody city.

Scenario...You're a young, educated person looking to buy a condo. You have $250,000 to spend. You can buy something in Hamilton, which has less amenities than Toronto, but it will give you more square footage. Or, you can move to Toronto, get something smaller, but enjoy a more lively environment. It's a toss-up.

However, here's where tax policy can be a game changer. You then consider the total costs of owning a condo, which now includes city taxes. In Toronto, these taxes come out to 250k x .8548% = $2,137. In Hamilton, these taxes add up to 250k x 1.5878% = $3,969.50, or $152/month more in taxes.

Furthermore, if that 250k condo rises in value 5% in both Toronto and Hamilton, the increased tax cost is as follows...

250k x .05 = 12.5k in new equity.
12.5k x .8548% = $106.85 more in taxes if you live in Toronto.
12.5k x 1.5878% = $198.48 more in taxes if you live in Hamilton.

Therefore, even if Hamilton property values rise as much as Toronto's, which is doubtful, the Hamilton condo owner still ends up losing, because they have to pay more in taxes.

By insisting on charging high tax rates on people's biggest asset, the City of Hamilton is GUARANTEEING a losing proposition for home buyers. You simply can't make as much money owning a home/condo in Hamilton as you can in Toronto.

And you all wonder why people with money aren't demanding new condos in Hamilton? Maybe it has to do with the fact that Hamilton likes to tax more of people's net worth.

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