The reaction to the province’s approval of new taxes on non-resident landowners has been greeted with a surprising amount of skepticism.
On April 8, the provincial government passed the Non-Resident Deed Transfer and Property Taxes Act, which are estimated to generate $81 million in revenue in 2022-23.
The province said the legislation will help make housing more available and attainable for Nova Scotia residents.
Budget 2022-2023 introduced a new Non-Resident Deed Transfer Tax in the amount of five per cent of the value of residential real property purchased by a non-resident of Nova Scotia.
The budget also introduced a Non-Resident Property Tax in the amount of $2 per $100 of assessed value on residential real property owned by a non-resident, excluding multi-unit (three or more) dwellings and those on a 12-plus month lease to a Nova Scotia resident.
According to the Department of Finance and Treasury Board, exemptions under the Provincial Non-Resident Property Tax 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 Provincial Non-resident Deed Transfer Tax 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, as well as transactions related to mortgage foreclosures, charities and family estate planning and/or execution.
Arichat native Jean Theriault, who has lived in Alberta for the past 30 years and owns land on Isle Madame, has been in contact with Richmond MLA Trevor to register his opposition to the taxes.
In his case, Theriault said he is going from costs of $700 per year to approximately $2,000 with the “stroke of a pen.”
Theriault called the Non-Resident Property Tax “pretty extreme,” noting that it amounts to an increase of 200 per cent per cent on a property.
These new taxes will “deter” people from buying land and homes, and force some property owners to leave Nova Scotia, Theriault said.
Theriault also takes issue with the assertion that the new taxes will help address housing shortages in the province since the money is going into general revenue.
Not just the housing market, Theriault said the economy of places like Richmond County, which has one of the highest concentrations of non-resident landowners in the province, will suffer. He said the construction industry, local realtors, and tourism all benefit from non-resident property owners.
Theriault added that with rising interest rates and the government printing out $400 billion to deal with the pandemic, the housing market will adjust on its own.
Non-resident property owners in Guysborough County said the moves, which took them by surprise, will double or triple their tax bills overnight.
David Ridgeway, who lives in Alberta but owns a cottage near Guysborough, said his taxes will be more than double previous years with practically no warning.
Lee and Julie Wormington, who spend as much as four months a year at a mini-home on Lochiel Lake they bought five years ago, said neither of them is happy about the hikes, as Julie noted that they now have to pay “double, even triple” what they paid before.
Lee said the tax hikes target people like him and his wife, who don’t fall under any of the exemption categories. He feels this is political as most non-residents cannot vote. He said one of the unintended consequences of this new tax is the possible impact on rural development.
Some residents agree that the new taxes actually send the wrong message and work against their long-term interests.
Neil Black, chairman of the Heritage Goldenville Society, said he was disappointed there was no consultation on the levy, or how it could be implemented.
Nancy O’Regan, executive director of the Guysborough County Housing Network, said more community housing is needed by building and purchasing more housing in local communities. She worried the new measures could discourage local residents and those who spend tourism dollars locally.
In a news conference on April 8, Nova Scotia Finance Minister Allan MacMaster defended the taxes as an economic and social development tool. The Inverness MLA said that people can’t find a place currently, and it’s holding the economy back.
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, MacMaster said there is no way to know for sure until they are implemented.
It is possible the taxes will not cause as much turmoil as initially feared, since many non-residents might decide that the coastal views and easy lifestyle are worth the extra money.
Considering the rising costs for items like gas and food, it remains equally probable that the advantages of spending summers here might prove too expensive.
As MacMaster noted, it’s too early to tell how the taxes will affect the housing and property market, and if history has taught anything, it is also unknown how economic and social factors – other than taxes – could play into the decisions of non-resident property owners.
If this local sample is any indication, there are some out there who oppose these taxes with convincing reasons for their skepticism.
Hopefully, this attempt to open up housing options will not result in an exodus of property owners from the province.