On May 5, Nova Scotia Premier Tim Houston backtracked on a property tax that the provincial government implemented on April 1, targeting out-of-province residential property owners.
“My intentions all along were to improve home affordability, not to be at odds with our core value of being a welcoming province,” Houston said in a press release.
As of October 2021, Halifax was tied for the lowest vacancy rate in Canada at one per cent, according to the Canada Mortgage and Housing Corporation. The aim of the property tax, which the provincial government introduced alongside a non-resident deed transfer tax, was to convince non-resident property owners to sell or rent their properties to Nova Scotians, freeing up affordable housing.
The Property Tax required non-resident owners to pay an annual two dollars per $100 of the property’s assessed value, as determined by the Property Valuation Services Corporation. The deed transfer tax, which is still in effect, requires any non-resident purchasing a residential property, including vacant land classified as residential, to pay a five per cent tax on the property’s purchase price or assessed value (whichever’s greater). The only exemption is if the non-resident decides to move to the property permanently within six months of purchasing.
Initially, the provincial government scaled back the non-resident property tax in an effort to ease strains on non-resident small cottage owners. In a May 3 press release, the government stated that the first $150,000 of an assessment wouldn’t be taxed. But Premier Houston scraped the tax altogether on May 5, saying that he would find a different solution to making housing more affordable in Nova Scotia.
The announcement has come as a relief to non-resident cottage owners. “I think this fall’s CFA tax—I call it the CFA tax, Come-From-Away tax—was just bad policy,” says Glynn Williams, a capital investor who lives in Toronto and owns a cottage in Guysborough, N.S.
Williams bought his cottage in Guysborough 33 years ago after he and his wife took a bike trip along the province’s east coast. “I said, ‘Holy cow, this place is amazing.’ On the left are these wonderful forests and on the right is the ocean.” Williams fell in love with the province, promoting it to friends and later serving on Nova Scotia’s tourism board.
Williams felt a particular affinity for Guysborough, one of the earliest continuous settlements in Canada. In pictures from the early 1900s, you can see that Guysborough was a bustling town with a major harbour, Williams says. But by the 1990s, it had fallen into disrepair. To help restore the town, Williams started buying up struggling businesses, refurbishing them as a way to draw in tourists and provide jobs to locals.
Within Guysborough, Williams now owns a historic inn, a cafe, a bakery, a craft brewery, a distillery, and a vineyard. He also purchased Acadian Maple in 2019, near Peggy’s Cove, the largest maple syrup manufacturer in the province. His investments have helped revitalize the area. But when the Nova Scotian government implemented the non-resident property tax, Williams says he cancelled all of his capital spending and investments in the community.
“The CFA tax was really disconnecting, and it caused me to think twice about what I was doing all of this for,” he says. “My property taxes would have quadrupled on my personal property, which was ridiculous. It would have exceeded the taxes I pay in Forest Hill,” Williams’ primary residence in Toronto.
Williams says he does think scrapping the property tax is a step in the right direction, but he still has concerns about the non-resident deed transfer tax. “I think the five per cent deed transfer tax will cause some potential newcomers to the province to have second thoughts,” he says.
Specifically, non-resident investors like himself, the people who pour money into their communities, stimulate the economy and provide jobs to locals giving them the means to afford a home.
“When Canadians are treated differently from one another,” Williams says, “there are unintended consequences.”