HALIFAX — Michelle Keall says she is considering selling her home in Nova Scotia because of the provincial government's new tax on non-resident property owners imposed to ease the housing shortage.
“I feel like I’m being penalized,” Keall said in an interview Monday, adding that she expects to have to pay an extra $9,000 a year to keep the home.
Keall was born and raised in Bridgewater, N.S., and moved to Ontario 25 years ago. She purchased a house in Queens County in 2014. Now retired, Keall spends five to six months out of the year in Nova Scotia.
“My whole family is in Nova Scotia … My parents are elderly, and it’s important for me to go home in the summertime.”
The home in Port Mouton, on the southwest coast, allows Keall to easily visit her parents, siblings, nieces and nephews.
“My gosh, and now we might have to end up selling it," she said.
Under the tax measures, which took effect April 1, non-residents who buy property and do not move to the province within six months of the closing date have to pay a transfer tax of five per cent of the property's value. A tax of $2 per $100 of assessed value of residential properties owned by non-residents is also being levied.
The property tax, however, doesn't apply to buildings with more than three units or to those rented to Nova Scotia residents year-round.
Introduced in Progressive Conservative Premier Tim Houston’s first budget, the new taxes are expected to generate $81 million in revenue in the 2022-23 fiscal year. They are also designed to help ease the housing shortage across the province by encouraging non-residents to sell their homes to locals and by tempering fast-rising prices.
Houston has repeatedly said Nova Scotia is facing a housing “crisis,” with properties in short supply across the province. Halifax’s vacancy rate hit 1.9 per cent in 2020, and it was at just one per cent the year before. In 2021, Nova Scotia’s Affordable Housing Commission said the situation was "at a breaking point.”
Finance Minister Allan MacMaster has said it's unclear, however, whether the new measures will work to increase supply or cool down the market. He told reporters earlier this month, "there is no way to concretely know for sure until (the tax) is implemented.''
The Finance Department says there are about 27,000 properties in Nova Scotia owned by non-residents and more than half of them are owned by Ontarians.
Claire Scheuren, an Arizona woman who has owned property on the southeast coast of Cape Breton since 2007, says she supports Nova Scotia’s efforts to increase revenue, but she says these new taxes seem “counterproductive.”
“They’re trying to increase revenue, and I’m all for that,” Scheuren said in an interview Monday, reached at her house in Cape Breton. “But this particular strategy doesn’t sound effective.”
Scheuren doesn’t think the province should discourage out-of-town residents like her who are contributing to the local economy.
“I pay property taxes, but I also purchase a lot of things here," she said. "I’ve put hundreds of thousands of dollars' worth of work into my property, and I’m hiring people to do that.”
Scheuren says that as an American, she’s particularly confused as to why the new taxes apply to non-residents from Canada. She says she’s concerned about her neighbours from Quebec and Ontario who are “vitally connected to Cape Breton” but don’t live in Nova Scotia year-round.
“I’m not advocating they raise my taxes; I still don’t think it’s a good idea, but to do it to the Canadians I think is absolutely unfair,” she said.
“It’s more justified to do it to me; I could see an argument for that. But to do it to someone who’s from here … I think that’s a really, really bad idea.”
Houston said last week he understands the new taxes have “stirred up a lot of emotions.”
Nobody likes to pay more tax, but the government has obligations to provide services to Nova Scotians, he said.
“The reality is in this province that we have a $500-million deficit," he said. "We have significant, significant needs."
Public hearings on the tax legislation continue before the legislature’s law amendments committee on Tuesday.
This report by The Canadian Press was first published April 18, 2022.
Lyndsay Armstrong, The Canadian Press