Bringing Common Sense to Property Tax

March 2019 Briefing Note
Election Position Paper
Sept. 10 Press Release
Sept. 14 Press Release

Fair and Transparent Property Taxes

New Brunswickers should have a fair and transparent property tax system. But right now, we don’t.

For New Brunswick’s REALTORS®, “fair” means being consistent when it comes to property taxes – calculating taxes in the same way for everyone, every time. It also means recognizing that property prices can go down or stay the same – price increases are not a guarantee.

Property taxes by themselves are not a bad thing – they help us pay for many of the government-provided services we enjoy. However, if property taxes are too high, it can negatively impact New Brunswick’s potential for economic growth and affordability of living.

  1. We need fair property value assessments

New Brunswick’s property value assessment system needs to be fixed, and it’s a big part of why our taxes are so out of touch with reality.

Many assessments don’t match property market values. Last year, New Brunswick’s MLS® residential sales statistics showed more than 90 per cent did not reflect true market value. In fact, 42 per cent of properties sold for more than the assessed value, while 56 per cent sold for less – that means almost all sales didn’t match their assessment.

We think the actual amount a property sells for should be used as its value assessment. If it didn’t sell that year, then the last amount it sold for, plus annual increases equivalent to cost-of-living increases, should determine the assessed value, except in the case of major renovations.

  1. We need fair land transfer taxes

In real estate, the true value of a property is what the buyer is willing to pay, not what someone thinks it could be worth. That’s why we think New Brunswickers should be paying taxes on what is, and not “what if.”

All New Brunswickers pay a land transfer tax when they buy property. And right now, the land transfer tax is guaranteed to be the highest possible. That’s because it’s calculated by using either the purchase price or the assessed value – whichever one is higher.

We don’t think that’s fair. With everything else, from food to cars to clothes, people are taxed on what they actually paid. It should be no different for real estate.

So how often is the assessed value greater than the sold price, and how often are buyers paying land transfer taxes on it? According to 2017 MLS® reports, 56 per cent of properties that year had an assessed value higher than their sold price – which means those homebuyers paid more tax than they would have if the actual sold price was used.

  1. We need to get rid of double taxation

All New Brunswick properties should be taxed in the same way. And right now they’re not.

New Brunswick is the only province that charges double tax on certain types of properties, which means property owners pay taxes to their city or town as well as the province. There are no extra services because of the double tax. Besides being unfair for the people already living here, it also discourages real estate investment and business development, two things important to growing our province’s economy.

Double tax applies to non-owner-occupied properties like apartment buildings, cottages and rental units, as well as commercial property and factories.

What To Do Now

Right now, New Brunswick’s property taxes are too high, inconsistent, and unfair. To improve them, the New Brunswick Real Estate Association (NBREA) recommends a comprehensive review of the province’s entire property tax system, to ensure New Brunswick follows best practices and is competitive in the global market. For that, we suggest the creation of a task force with government and non-government members to recommend changes to the property tax system so it is fair, transparent, and reasonable.

We realize that making significant changes to New Brunswick’s property tax system is a big undertaking that will impact our province’s budget, but it must be done. We recommend making the changes gradually. Ultimately, our province will benefit from better economic development, financial stability for both municipal and provincial governments, and a fair and transparent tax system for property owners.

Unfair property taxes are a significant issue that impacts hundreds of thousands of New Brunswickers. New Brunswick’s REALTORS® are ready and willing to guide our province’s leaders in bringing common sense to property taxes, just as they guide families every day in making the single biggest investment of their lives.