Two new taxes targeting non-resident property owners are necessary to help Nova Scotians gain access to housing at a time when vacancy rates are extremely low, Finance Minister Allan MacMaster said Friday.
But it’s still an open question, he admitted, whether the deed transfer and property taxes will result in non-resident property owners selling to local interests and making more housing supply available. It’s also unclear whether the new taxes — included in the recent provincial budget — will help ease skyrocketing house prices, he added.
“That remains to be seen,” MacMaster told reporters via video link. “There is no way to concretely know for sure until this is implemented.”
The housing shortage is especially acute in the Halifax area, where the vacancy rate for residential buildings fell to one per cent in October of last year, according to data from the Canada Mortgage and Housing Corporation.
MacMaster said that while he understands some out-of-province property owners may feel frustrated, the government believes it needs to do what it can to increase the housing stock.
“Some people will feel that way (unwelcome), but I guess we’re trying to be mindful of Nova Scotians,” he said.
According to the Finance Department, there are about 27,000 properties in Nova Scotia that are owned by non-residents, more than half of whom come from Ontario.
The government estimates the new taxes will generate $81 million in revenue in the 2022-23 fiscal year.
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 property tax of $2 per $100 of assessed value of residential properties owned by non-residents is also being levied. The tax doesn’t apply to buildings with more than three units or to those rented to Nova Scotia residents year-round.
MacMaster said the housing shortage has a knock-on effect for businesses looking to expand, because it’s hard for companies to grow when potential workers can’t find accommodations.
“If people don’t have a place to live and can’t find a place to live, it’s holding back our economy,” MacMaster said.
The minister made the comments after tabling the Financial Measures Act in the legislature. The Act provides the legislative authority to implement tax measures contained in the budget, which was introduced last week.
Other tax changes in the budget and covered by the act include a $500 refundable tax credit for children’s sports and arts-based activities, retroactive to Jan. 1. As well, the act would return the personal provincial income tax paid on the first $50,000 earned by those under 30 who work in skilled trades.
Meanwhile, MacMaster said he conducted Friday’s briefing remotely because he and his family are recovering from COVID-19. He said that he had contracted a mild case of the disease and began experiencing symptoms on Monday.
This report by The Canadian Press was first published April 8, 2022.