Property taxes in Calgary are determined by a budget that the city sets each year. This budget is based on the amount of money the city projects it will need for various services. This budget also determines the amount of property taxes that residential and business properties are subject to. There are many factors that go into determining the amount of property taxes that residential and business owners will be liable for each year.
3.6 per cent increase
The city of Calgary recently approved a 3.61 per cent increase in property tax. The increase would be applied to all properties in the city and would mean a total increase of $172 for the median-priced single-detached home. In contrast, property tax increases for properties whose value has increased less than six percent would be lower. The proposed increases have caused concern among some Calgary residents.
Calgary property tax revenue is made up of two primary sources: residential property and commercial property. For Calgary, 45 per cent of its property taxes are paid on residential property, while 10 per cent comes from business property. The other 10 per cent of the total tax revenues come from grants in lieu of taxes.
Although property taxes have fluctuated over the years as a percentage of personal income, they have remained relatively stable in the past two decades, largely reflecting changes in school finance policy. Municipal property taxes have also increased, but the overall burden has remained relatively stable. Calgary is now the fourth largest city in Canada, followed by Edmonton. Its property tax burden represents about 6.4 per cent of personal income, while Edmonton is just 4.1 per cent.
The recent property tax increase in Calgary is a symptom of the city’s financial stress. While a decline in property values downtown has resulted in a large loss of commercial property tax revenue, Calgary’s city council is scrambling to make up the shortfall with budget cuts, tax hikes, and savings.
Despite the recent increases in property taxes, the total burden of property tax in Calgary has been lower since 2000. Property taxes are the largest tax paid by local governments in Canada.
Office vacancy rates are high
The office vacancy rate in Calgary is higher than most metro areas in Canada. While Vancouver, Ottawa, and Saskatoon all have office vacancy rates in the low teens, Calgary is above the national average at 27.6%. Leasing activity is expected to increase in the next several years, thanks to a positive outlook in the energy sector. However, a large inventory of vacant office space will likely force firms to postpone new projects through at least 2024.
While the office vacancy rate in Calgary is still high, there are several signs that things are improving. First, more commercial real estate transactions are being made in Calgary. There are currently 217,000 square feet of new space available, mostly in suburban office nodes. There are also five buildings under conversion from office to residential uses. These new deals will not make up for the loss of oil and gas tenants, but they will show that other industries are looking for space in the city. Secondly, the rise in oil and gas prices is driving leasing activity in Calgary among smaller energy companies. A flight to quality is also playing a role.
Another sign of the improving office space is that landlords are making investments in upgrading their buildings. Investing in upgrades is one way to boost tenant satisfaction and lower your office vacancy rates. In fact, landlords who invest in upgrades are outperforming those who don’t. In addition, the city of Calgary is redeveloping old office buildings into residential spaces.
Overall, Calgary’s office vacancy rate is among the highest in the country. However, it is not as bad as some other markets. The rate in the suburbs is the lowest in Canada, while in downtown Calgary, the rate is 32.8%.
Non-residential properties are assessed at higher rates
In recent years, property taxes have increased dramatically in Calgary. This has had a detrimental effect on business. Alberta municipalities must carefully consider the effects of non-residential property tax increases, since this money is crucial for financing municipal services. A recent study found that a 10 percent increase in non-residential property taxes can lead to a seven percent decrease in business investment. Businesses have long complained about the municipal government’s over-reliance on commercial and industrial property taxes.
In the city of Calgary, property taxes are significantly higher for non-residential properties than for residential properties. In fact, Calgary has one of the highest non-residential/residential property tax ratios in Canada. However, Calgary’s ratio of residential to non-residential properties is similar to that of Vancouver and Montreal.
The overall value of Calgary properties is rising, with the median value of single residential properties increasing by nine per cent from 2021 to 2022. However, single-family detached homes, which account for the majority of residential property assessments, have seen the largest jump, rising by nine per cent in value. In contrast, residential condominiums and multi-residential units have remained flat.
The assessed values of residential properties in Calgary are higher than those for non-residential properties. In fact, non-residential property values have been decreasing for the past three years. However, values for industrial and retail properties have been stable. This means that a homeowner can expect to pay an extra $11 in property taxes each month. The total assessed value of non-residential properties in Calgary is $313.5 billion. This is the highest value since 2018.
The biggest non-residential property assessment in Calgary is attributed to giant towers and the Calgary airport. Both of these buildings are owned by Brookfield Office Properties. In addition, the Suncor Energy Center, once the tallest building in the city, is no longer being assessed at higher rates. The Market Mall, meanwhile, saw a 6.8 per cent reduction in its assessed value this year.
Penalty for late payment
The city of Calgary is considering reducing the penalties for missing the property tax deadline. Last year, the deadline was extended to Sept. 30 to allow time for the property owners to make the payment. The council also approved rolling back penalties for late payments. The penalties are currently seven percent.
This reprieve will be effective until April 2022. Those who fall behind on their taxes may not know it, but the Government of Alberta has a program that will reimburse them. For example, if you are late paying your property taxes in Calgary, you can get a refund from the government of Alberta if you pay your taxes on time.
To avoid the late payment penalty, property owners must make monthly payments. This can be done through a pre-authorized payment plan, which allows property owners to pay their property taxes in 12 monthly installments from January to December. Then, in June, their monthly payments are adjusted according to the annual levy. Those on a Tax Installment Payment Plan can pay their taxes by debit card. However, it is important to make sure that you have a sufficient daily limit to cover the entire amount.
In addition to lowering the penalties for late payments, the city is considering a plan to offer tax deferrals for businesses. This would help businesses that are experiencing a tough economic time. Calgary has been receiving national recognition for this initiative. This may lead to changes in the penalties for businesses and non-profits in the city.
Impact on businesses
Property tax rates are increasing in Calgary, and they are impacting local businesses and small businesses in particular. The city relies heavily on the property tax revenue from businesses to fund public services. This has resulted in service cuts and tax increases, and even staff reductions. It is time for Calgary to reconsider its property tax rates and adopt a more transparent and predictable system.
According to Richard Truscott, vice president of the CFIB of BC and Alberta, Calgary’s property tax rates are making it difficult for small businesses to stay in business. The city has to look for ways to make up for the loss of revenue from property taxes in other areas. This problem is made worse by Calgary’s growing vacancy problem and increasing property values in Inglewood.
One example of this problem is a beer hall in Calgary. The Wurst beer hall, which opened in 2014, has a sign that shows that it paid $74,000 in property taxes in 2014. In comparison, its tax bill for this year is $208,000. The owner can’t comment on specific cases because of confidentiality issues, but he said it’s likely that the previous occupier’s tax would have been added to the overall tax bill.
The city council has set aside funds for tax relief in the past but has yet to discuss how much money they’ll be spending on tax relief in 2022. In the meantime, they’ve already set aside $13 million for tax relief in 2021, but only half of that was distributed to businesses.
The city’s budget has been under severe strain in recent years, with the decline of the oil and gas industry hitting the city’s economy. As a result, downtown office towers are now more than 25% empty. This has created havoc on municipal finances and has forced commercial landlords to raise their property tax rates to make up for the gap.