Value Propositions, a follow up to the Property Tax discussion we started the other day

It has been argued that Mississauga has a lower residential tax rate than Brampton. Mathematically, I suppose that is technically true.  Last year, with all three levels combined (city, regional, school), the residential (RT) tax rate was approx. 0.99% for Mississauga, vs. Brampton’s 1.103025%.  So 113 basis points apart. This means, that for the same property value, say $600,000, in Mississauga you are paying $5,940 in Property Taxes, and in Brampton, $6,618. An extra $678.  Terrible, right?

Not so fast, <word that doesn’t appropriate another’s culture but means big boss person with a more eloquent sound to it>!

Go to right and now, and put in a price range of $550,000 to $600,000 and see what you can buy in Mississauga. Spoiler Alert: it’s a Condo or a Row Townhouse (Not “Multi-Residential Highrises, which have different rates attached mind you). And I’m not against those housing types, but Spoiler Alert Number 2: They come with Condo Fees attached. And what are condo fees, really? A price paid, involuntarily, to a management level corporate body, in exchange for property related services, which can lead to a sale of your property if you fall into arrears, elected by the members on a regular basis through democratic vote …. Gee, that’s starting to sound a lot like Property Taxes.

As I have written here before, Condo Fees are just a fancy way for Cities to download services to smaller levels of micro-quasi-governments. The Condo Board will now be clearing the ice and snow, maintaining and insuring the drive way (just a short road after all), providing fitness facilities, etc.  A random sampling of MLS listings showed me a range of Condo Fees for the $550K-$660K price point clustering around the $500/mth mark.  Which, scrolling up, isn’t a significant difference in the Property Taxes being charged by the Cities themselves. Interesting, isn’t it?

The value proposition of each City can be measured by what the Consumer wants from their Home. Do they want high density condo or row townhouse living? Many do, as witnessed by Mississauga’s growth in the sought after young and single (and therefore spenders of cash) demographic. But do these residents stay once they are married and start a family? When there are two kids to put through school, do they stay in the crowded condo with no yard? Or do they move North, to Brampton, where there are yards, parks, safe streets to play on?

Mississauga is not a less expensive place to live than Brampton because the “Rate” of taxes is slightly lower. In fact, if you add in the almost mandatory Condo Fees you will be paying, in many cases, your tax burden will actually be higher on a dollar for dollar cost of house basis. Alternatively, you could simply say that per housing unit type, say a 4 bedroom house, because the price will be so much higher in Mississauga, your property taxes will always be higher in Mississauga.


Editors Note:

The Multi Unit Tax Rates for Brampton, Mississauga and Toronto are as follows:

Brampton Mississauga Toronto
Multi residential 1.74812 1.244106 1.463407

It’s hard to the same financial analysis as above, as there are exceedingly few Highrise Condos in Brampton that even cost as much as $550,000 and $600,000; and exceeding few that cost as little as that in Toronto without being either 1 or 0 bedroom units.

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