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Will higher property tax expedite the exodus off-island?

Will higher property tax expedite the exodus off-island?

Property taxes are a factor weighed by potential homebuyers, but how big a role they play in the exodus of Montrealers to off-island communities is not immediately clear.

It’s a question that may assume more importance with Tuesday’s news that Montreal’s average property tax increase in 2013 will be 3.3 per cent.

“It doesn’t always come down to taxes, but if it does, Montreal loses,” real-estate broker Mary Lamey said.

Some clients with young families are looking concurrently at properties in Montreal and off-island, in such places as Greenfield Park and Châteauguay, said the Century 21 Vision broker.

Those clients are mainly considering taxes and “where their money will buy them more” house, she said.

Some of Montreal’s emerging neighbourhoods, areas that offer relatively low-cost properties, have had some the biggest jumps in property taxes in both 2012 and 2013.

Taxes in the Mercier-Hochelaga-Maisonneuve borough will increase 4.9 per cent in 2013 — they were up 3.72 per cent in 2012 — while the Sud-Ouest borough’s taxes are up 4.6 per cent in 2013, following a 4.88 per cent hike in 2012.

It makes sense — intuitively, anyway — that higher Montreal taxes probably contribute to an exodus off-island, Concordia University professor Craig Townsend said.

But a definitive statement would have to be based on solid research, which is not immediately at hand, said Townsend, from the university’s department of geography, planning and the environment.

There are many factors at play in the residential housing equation, he added.

Offsetting higher housing costs and taxes in central Montreal is the desire by people to be close to the services and amenities, Townsend said.

The cost of commuting, in both time and money, is also a major factor.

“There is a lot of residential development underway in Montreal and if (aversion to high taxes) was really that bad, that would not be happening,” Townsend said.

Montreal property taxes, combined with provincial and federal taxes, make Montrealers among the highest-taxed North Americans, Michel Leblanc, CEO of the Board of Trade of Metropolitan Montreal, noted Tuesday.

Montreal taxpayers “deserve a break, especially since the Charbonneau Commission (into corruption and collusion in the construction sector) shows that strengthening management practices would generate significant savings for the city,” Leblanc said.

Montreal’s property tax increase of 3.3 per cent is 50 per cent higher than the estimated rate of inflation, he said.

Yes, property taxes are a consideration when buyers are assessing competing jurisdictions, Leblanc said. But, he added, “I think that currently, that decision (of where to buy) is much more influenced by commuting times, traffic congestion and the value of houses on the market.”

The tax hike in Montreal increases homeowners’ overhead, but one has to weigh tax increases that may be looming for off-island communities, he said.

What concerns the board the most is the increased tax burden on small and medium-size businesses in Montreal that are already facing tough times. That increased pressure translates into fewer new jobs being created, Leblanc said.

lmoore@montrealgazette.com Twitter:@LynnMooreTweets