Comment 43094

By A Smith (anonymous) | Posted July 10, 2010 at 20:22:08

If we want to increase our share of new development, including downtown condos, how does it make sense to tax each dollar of investment at 50% higher rates than our GTA neighbours? In Toronto, if Johnny Rational-Consumer buys a $180k condo, he will pay $1,530 in taxes.

If he wanted to spend that $180k in Hamilton, he would have to pay $2,754. Assuming that both properties increase in value 3% in one year, that would produce $5.4k in equity gains. However, when you take away the tax costs related to ownership, it leaves him $3,870 assuming he bought in Toronto, but only $2,646 if he bought in Hamilton.

Multiply that $1,200K over a few years and you can see why everybody wants to live in low tax Toronto. It's a great city to build wealth over time. If we had similar tax rates on residential property, we would become known as a great place to invest and this would create the conditions that would turn parking lots into high-rises.

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