Sunday, July 3, 2022

New property tax hits non-residents hard

Owners unhappy about paying up to three times more

  • April 13 2022
  • By Alec Bruce, Local Journalism Initiative reporter    

GUYSBOROUGH – Non-resident owners of properties in Guysborough County say sharply higher taxes imposed by the province earlier this month have left them feeling perplexed and even stymied about their immediate and long-term futures “down home.”

The legislation, which came into effect April 1, levies an additional $2 for every $100 of assessed value and imposes a five per cent deed transfer tax on the purchase prices or assessed values – whichever is higher – on local properties owned by people whose primary residences are outside the province.

In a letter sent to municipalities on April 6, the Department of Municipal Affairs and Housing said the measures will “improve our workforce, economy, and housing” as part of the 2022-23 provincial budget. According to a separate government statement the same day, the new taxes contained in the Financial Measures Act (2022) will apply to approximately 27,000 properties in the province and should generate $81 million in revenue for the fiscal year to “address our housing crisis” caused by a lack of affordable places to live.

But non-resident owners of properties in the Municipality of the District of Guysborough (MODG) and St. Mary’s who spoke to The Journal said the moves, which took them by surprise, will double or triple their tax bills overnight – forcing at least one to consider his housing and spending plans in Nova Scotia as early as this year.

“I am disappointed,” said David Ridgeway, who lives in Alberta but owns a cottage near Guysborough. “My taxes will be over double [the previous year’s amount], and that’s payable in June. That’s with practically no warning. It’s doable this year. But, do I even go there this year? This is money that’s just not going to be [available] to spend when we’re there, and there is only so much money, after all.”

Ridgeway, 67, was born in Halifax and has been living and working in Alberta since he was 22. Now retired, he acquired the family land and cottage near Manchester, Guysborough County, a few years ago. Since then, he said, he and his son have spent time and money getting the multi-acre spot into shape.

“We renovated the whole thing, we built a foundation,” he said. “Last summer, I even managed to get my grandchildren down, and we bought a little boat to take them out … Over the past five or six years, we’re talking tens of thousands of dollars.”

He noted: “The tax thing is a one-shot deal. But, when we’re in Nova Scotia, one dollar of spending goes around 10 times.”

Normally, he said, he makes “a real commitment” to get back to Guysborough during the fall to “catch the Celtic colours.” Now, he admitted, “I haven’t had a chance to figure it all out,” adding: “But I’ve really got to start prioritizing what to do. It’s not just this year. Do I keep all the property or sell some of it?”

Lee and Julie Wormington, who live in Toronto, have spent as much as four months a year at the four-season mini-home on Lochiel Lake – about 30 kilometres north of Sherbrooke – they bought five years ago. In recent years they’ve only managed to get down for August, but they hope to move there permanently in “the foreseeable future.”

The new taxes won’t alter their plans this year, they insisted. “We love Nova Scotia so much,” said Lee, who has spent his entire life and career in Toronto but “fell in love with St. Mary’s” 30 years ago while on a trip there with Julie, who had spent part of her childhood in the Antigonish area. “This is not going to change anything for us, really.”

But neither of them is happy about the hikes. “I don’t love the fact that we’re now paying this extra tax,” said Lee, who recently retired from the Bank of Nova Scotia. Added Julie: “It’s a good chunk of money. We’ll have to pay double, even triple, what we pay now.”

According to the new rules released by the Department of Finance and Treasury Board last week, some properties are exempt from both the Provincial Non-Resident Property Tax and the Provincial Non-resident Deed Transfer Tax.

Under the former, exemptions include: Residential properties with more than three dwelling units; residences with three or fewer dwelling units where 50 per cent or more of the ownership is by residents of Nova Scotia; residences with three or fewer dwelling units where over 50 per cent of the ownership is by non-residents of Nova Scotia and rented out on a full-time basis for at least 12 months; and properties classified as commercial or resource in which no portion is residential.

Exemptions under the transfer tax measure include: Transactions dated before April 1, 2022; transactions that only involve residential properties with more than three dwelling units; residences with three or fewer dwelling units that are being transferred to grantees where 50 per cent or more of the ownership is by residents of Nova Scotia; and residences with three or fewer dwelling units that are being transferred to grantees who are not residents of Nova Scotia but who intend to move here within six months of the transfer.

Other exemptions involve transfers between spouses and/or common law partners; and transactions related to mortgage foreclosures, charities and family estate planning and/or execution.

To Lee Wormington, the tax hikes – which clearly target people like him and his wife, who don’t fall under any of the exemption categories – seem political. “I don’t like it, but I understand it,” he said. “It makes sense because the people that you are going to tax aren’t going to be voting here. This is going to be popular among the local residents because it sends a bit of a message.”

Some local residents, however, feel the new taxes actually send the wrong message and work against their long-term interests. “As chair of a small museum on the Eastern Shore, I am disappointed there was no consultation on the levy, or how it could be implemented,” Neil Black, chairman of the Heritage Goldenville Society, told The Journal in an email. “[This is] a demonstration [of] not caring [about] the Eastern Shore by our provincial government.”

Added Wormington: “One of the unintended consequences of this new tax is the possible impact on rural development, which is needed and should be encouraged.”

Other local authorities question the efficacy of the measures. “To be honest, I feel like it’s a bit like closing the barn door after the horse is gone,” Nancy O’Regan, executive director of The Guysborough County Housing Network, told The Journal in an interview. “Really, what’s needed is more community housing. We need to start to build and purchase more housing and getting that into our communities.”

O’Regan also worries that the measures may discourage both “local people” and “folks who come here with tourism dollar dollars … Some economic measures help one sector and then they hurt another sector.”

In a news conference on April 8, Nova Scotia Finance Minister Allan MacMaster defended the taxes as both an economic and social development tool. “Our focus with this legislation has really been on the fact that so many Nova Scotians are struggling to find housing,” he told reporters. “If people don’t have a place to live and can’t find a place to live, it’s holding back our economy.”

Asked whether he believed the new taxes will dampen the overheated housing market, or even persuade non-residents to sell their places to resident Nova Scotians, he said: “That remains to be seen. There is no way to concretely know for sure until this is implemented.”

According to the letter from the Department of Municipal Affairs, the new taxes will be administered by the province directly. “The Financial Measures Act annually accompanies the other aspects of the Budget and puts into legislation those measures which require legislation in order to take effect,” it stated. “Both the Non-Resident Provincial Deed Transfer Tax and the Non-Resident Property Tax will be contained within this Bill.”

The Financial Measures Act was introduced in the legislature on April 8.

Meanwhile, the Municipality of the District of St. Mary’s – where recent and significant increases in deed transfer taxes have been helping keep local public finances in the black – is trying to get up to speed on how the changes will or will not affect the way it operates and communicates with both residents and non-residents, alike. “Staff plans to have this topic as an item for the upcoming Committee of The Whole agenda for April 20,” St. Mary’s Chief Administrative Officer Marissa Jordan said in an email.

For David Ridgeway and others like him, the future remains unclear. But, he said, it could be as straightforward as hitting the road east again.

“I could just move to Guysborough for good. Of course, I’m getting older now so my medical bills are probably going up. Nova Scotia, not Alberta, will have to have to pay for that. Like I said, there’s only so much money to go around.”