[Hydrogen]

One more comment to this. Regardless of the fact she paid $50,000 for the property, she is now living a $700,000 life style by simply owning that home. The amount Bill Gates paid to start Microsoft matters not when determining the outcome. Grandma could easily choose to move into a $350,000 property and have $350,000 in her pocket. Nobody today has the option of paying $50,000 for that property and I doubt Grandma is going to sell it to them at that price out of the goodness of her heart.

But where does such an approach stop? First off, starting a business and buying a house are not the same thing. Most people buy a home to live in it. Besides, granny never asked to live in a $700,000 house; she bought a $50,000 house. And because granny is living in a $700,000 house does not mean she is living a $700,000 a year lifestyle by owning the home. Don't confuse the market value of the property with an income. Granny could easily be pulling in only $30,000 on a fixed income.

This line of reasoning sounds like granny is being asked to move to a cheaper property so as to support an argument for a tax increase. Would you actually do this to granny?!

 

[Urban Shocker]

Granny may be a total bitch on wheels, but on the other hand she may not be - so let's not be too mean to her. She's paid her fair share of property taxes over the years, through all the ups and downs of the housing market, and several methods of calculating property tax. You can't blame her and Gramps for buying a house in Riverdale in 1951 for $5,000 and sitting on that property while the neighbourhood declined - cheap roonming houses in an undesirable part of the dreary east end that nobody wanted to live in for the next quarter century - and then perked up in the late 1970's, and is now booming.

She's Granny, not Flipper.

She's just about managing to get by on her CPP survivor's pension ( Granny - Bernice - was a stay-at-home housewife through all the years that her Chris worked at Eatons, and neither contributed to RRSP's in those days ), her Old Age Pension and her Guaranteed Income Supplement. She gets a break on her property tax, thank goodness. And she's 85 and she doesn't want to go into a home because she's lived in that house most of her adult life.

 

[scarberiankhatru]

If they slowly increased property or other taxes without telling us and making a big fuss, hardly anyone would notice...and hardly anyone that noticed would care...and hardly anyone that cared would do anything about it.

 

[Hydrogen]

^They are slowly increasing property taxes.
They have to tell us.
People care.
And if the taxes go high enough, people will do something about it.

 

[EnviroTO]

Check out the graphic from the Star.

http://www3.thestar.com/static/PDF/070721_tax_dollars.pdf

Basically city debt charges are higher than any service than any service the city provides other than police.

She's paid her fair share of property taxes over the years

I don't think she has... definitely not recently. In the last long while it has been businesses and apartment buildings paying their fair share and everyone else underpaying while city debt grows.

 

[EnviroTO]

If they slowly increased property or other taxes without telling us and making a big fuss, hardly anyone would notice...and hardly anyone that noticed would care...and hardly anyone that cared would do anything about it.

That is the problem I have with the municipal tax system. If it was a percentage based system (like GST, PST, Income Tax, etc) they would be able to say they are keeping the same tax rate and get more revenue rather than saying they are raising it. Virtually all other taxes are percentage based. Instead of "property tax" the city should only talk "property tax rate". That way if the mayor is asked: "Are the property taxes going up?" He could reply: "No, were holding the line at 0.588%". In past years they might have been able to say they are lowering the property tax rate during those years when the goal was 0%. When the price of cable goes up nobody talks about the tax increase... but the province and feds are collecting more money. Meanwhile the way city taxes are discussed things look worse than they really are because the city needs to say it is raising taxes every year.

It is interesting to look at the property tax rates over time.

In 2007 the rates are (city, education, total):
Residential 0.5888434% 0.264000% 0.8528434%

In 2002 they were (city, education, total):
Residential 0.7308100% 0.3730000% 1.1038100%

 

[EnviroTO]

But where does such an approach stop? First off, starting a business and buying a house are not the same thing. Most people buy a home to live in it. Besides, granny never asked to live in a $700,000 house; she bought a $50,000 house. And because granny is living in a $700,000 house does not mean she is living a $700,000 a year lifestyle by owning the home. Don't confuse the market value of the property with an income. Granny could easily be pulling in only $30,000 on a fixed income.

This line of reasoning sounds like granny is being asked to move to a cheaper property so as to support an argument for a tax increase. Would you actually do this to granny?!

But you have to admit that the people moving into the house would love to be getting the house for $50k but it is simply not possible. Granny didn't ask to live in a $50k house... she asked to live in THAT house. That house is worth $700k. Granny's house going up so much costs the people who buy her house. Granny doesn't need to have a big income to be living the $700k life... whether it feels like it or not, owning a $700k home IS a $700k life. Granny's kids who want to live around the corner will need to pay $700k to do it, even if it doesn't feel like a $700k neighborhood to them and they might need to choose to scrape by to do it because the mortgage payments won't be cheap. Their disposable income after paying the mortgage payments might be only $30,000. Granny makes a conscious decision how to look after her $700k and if she decides to keep it in her house it is her decision... a $700k decision.

 

[scarberiankhatru]

If it was a percentage based system (like GST, PST, Income Tax, etc) they would be able to say they are keeping the same tax rate and get more revenue rather than saying they are raising it.

I agree. The way it's done now, the media is able to spin it as "OMG, you're all going to have to spend $5000 more, and if you don't they'll shut down the subway!"

 

[Hydrogen]

Enviro,
I'm not sure what your point is here, but granny is not living a $700,000 a year lifestyle if she's pulling in $30,000. Granny is not drawing on the value of the house unless she borrows against it, and on $30,000 she could have a tough time paying that loan back. As for her not paying her fare share of taxes, granny is paying municipal taxes to cover not only city requirements, but municipal taxes to cover downloaded provincial responsibilities pushed onto the city. If her yearly tax bill increases, we can presume that granny is covering that. She's also paying (and has paid) provincial taxes. So granny has been paying her share.

As much as some people would like to hold home owners responsible for the value of their property, it does not work out that way. Yes, house prices have gone up, but all housing has gone up in price - often at different rates in different areas. Selling and buying usually does not net anyone immense profits unless they are downsizing. So long as a person is in their home and staying there they are not realizing direct profits of any kind from owning that home. Granny likes her nice house and doesn't want to downsize. That's her right. No need to punish her because of that. For all we know she found paying for a $50,000 home back then just as difficult as paying for a $700,000 home today.

 

[afransen]

Enviro,
I'm not sure what your point is here, but granny is not living a $700,000 a year lifestyle if she's pulling in $30,000. Granny is not drawing on the value of the house unless she borrows against it, and on $30,000 she could have a tough time paying that loan back. As for her not paying her fare share of taxes, granny is paying municipal taxes to cover not only city requirements, but municipal taxes to cover downloaded provincial responsibilities pushed onto the city. If her yearly tax bill increases, we can presume that granny is covering that. She's also paying (and has paid) provincial taxes. So granny has been paying her share.

As much as some people would like to hold home owners responsible for the value of their property, it does not work out that way. Yes, house prices have gone up, but all housing has gone up in price - often at different rates in different areas. Selling and buying usually does not net anyone immense profits unless they are downsizing. So long as a person is in their home and staying there they are not realizing direct profits of any kind from owning that home. Granny likes her nice house and doesn't want to downsize. That's her right. No need to punish her because of that. For all we know she found paying for a $50,000 home back then just as difficult as paying for a $700,000 home today.

Granny may have a right to live in that home, but the City has the right to tax at its discretion. That's where your argument falls down. Just because your hypothetical is a sympathetic character doesn't mean that the concept of taxation on the value of a property is bad. I'd rather see an economic argument.

 

[EnviroTO]

I'm not sure what your point is here, but granny is not living a $700,000 a year lifestyle if she's pulling in $30,000.

The point is that if someone buys Granny's house, even if it uses every last dime they have to do it, they are living in a "$700k home" lifestyle. The person who buys Granny's house could use every last penny to get the house and have no money left for food and utilities and that put them a similar situation... actually a worse situation considering they would probably be struggling to pay mortgage and Granny has probably paid hers off. Granny bought ice cream when her husband retired for only 25 cents per scoop, should Baskin Robbins charge based on when people were born? The prices of running the city are going up, the value of Granny's investments are going up, but somehow Granny's property tax should stay the same?

Why don't you look at the scenario where another Granny rented the whole time. She is sitting on no assets and I highly doubt her rent stayed the same despite her staying in exactly the same place.

Granny with the $700k house has an asset that did really well. Pretending otherwise makes no sense to me.

Like it or not many of the city's costs go up with the price of Granny's house. The cost of expropriation, the cost of hiring city staff, etc.

 

[Hydrogen]

Granny may have a right to live in that home, but the City has the right to tax at its discretion. That's where your argument falls down. Just because your hypothetical is a sympathetic character doesn't mean that the concept of taxation on the value of a property is bad. I'd rather see an economic argument.

Well, your response does not even resemble an argument. For example, the city may have what you refer to as a "right" to tax (these rights are, of course, granted by the province, though; remember that?), but there are limits to the level of taxation that home owners can bear. That is an economic argument, and if you owned a home it might actually grab you.

No jam from granny for you!

The point is that if someone buys Granny's house, even if it uses every last dime they have to do it, they are living in a "$700k home" lifestyle. The person who buys Granny's house could use every last penny to get the house and have no money left for food and utilities and that put them a similar situation... actually a worse situation considering they would probably be struggling to pay mortgage and Granny has probably paid hers off. Granny bought ice cream when her husband retired for only 25 cents per scoop, should Baskin Robbins charge based on when people were born? The prices of running the city are going up, the value of Granny's investments are going up, but somehow Granny's property tax should stay the same?

But wait, you are mixing the price of housing (which granny had nothing to with, by the way), with the purchasing choices made by some potential buyers who may not be able to afford a house in the Beaches, and ice cream. The buyers may have to look elsewhere in the city if they find it tough to buy granny's house (besides, I didn't know she was selling). But if they opt to use every last penny to make their purchase of granny's house, then that is their decision - principle, interest, taxes and all. If they then have to pay two land transfer taxes on top of the price, it won't help them to either buy the house or purchase ice cream, hardly the markers of a $700,000 a year lifestyle, in my opinion. I don't have a $700,000 a year lifestyle and I can afford ice cream (but it leaves me bloated so I opt for other treats).

I think you, I and granny are tangled up by the term "$700,000 a year lifestyle." No one pays down $700,000 on a house in one year. Usually it requires many years and may not require an annual income of anywhere near $700,000.

 

[scarberiankhatru]

Maybe Granny should get one of those reverse mortgages and live out her golden years in style.

 

[Pep'rJack]

No jam from granny for you!

you, I and granny are tangled up

Let 'em slide, adma - too easy.

 

[EnviroTO]

But wait, you are mixing the price of housing (which granny had nothing to with, by the way), with the purchasing choices made by some potential buyers who may not be able to afford a house in the Beaches, and ice cream. The buyers may have to look elsewhere in the city if they find it tough to buy granny's house (besides, I didn't know she was selling). But if they opt to use every last penny to make their purchase of granny's house, then that is their decision - principle, interest, taxes and all. If they then have to pay two land transfer taxes on top of the price, it won't help them to either buy the house or purchase ice cream, hardly the markers of a $700,000 a year lifestyle, in my opinion. I don't have a $700,000 a year lifestyle and I can afford ice cream (but it leaves me bloated so I opt for other treats).

You are living a lifestyle that includes a $700k home. I should have been more clear. People who buy fancy cars also have different levels at which they can afford that car. The point is that "not to sell" decisions are exactly the same as "not to buy" decisions. If I buy an asset now and decide not to sell it later when I need the money that is entirely my decision, no different.

The point is Granny has an asset that paid off. Many people are less fortunate. Granny with the $700k can CHOOSE to sell it an move into a condo for half the price. Many people cannot choose to move into Granny's $700k home. The other Granny which also has a fixed income but needs to pay rent has seen her rent rise with the rising prices. Why the sympathy for the Granny with the $700k asset she can cash in on by moving and no sympathy for all the other people who are faced with todays market price on properties and rent? Rental Granny has to cover rent with her fixed income and moving isn't going to give her a cash winfall.