The Canadian ( Tax ) way...

[kcowan]

Healthcare is about $614 Per YEAR.

That is just the user fee. The real costs are borne by income tax. The good news is that there are no co-pays nor deductibles no matter how much income you make.

 

[photoguy]

Just anecdotal evidence but whenever I talk about taxes with my canadian buddies they all seem very jealous of our rates in the US. It's quite possible to make several hundred k and be around 20% federal. But everybody likes to think the grass is greener.

I know/met a few doctors who felt that tax rates were so punishing in canada that they prefer to work only 2/3 days a week.

On the other hand, for wealthy folks like on an ER forum, so much is particular to ones individual circumstance and assets. For example, my brother's property tax (toronto) is going up something like 10-15k because the tax assessor updated home values. If he were in California he wouldn't be paying any more due to prop 13. On the other hand when it comes time to sell the home, he'll probably have at least $1M in capital gains tax free above and beyond the $500k exemption in the US.

 

[ShokWaveRider]

Just anecdotal evidence but whenever I talk about taxes with my canadian buddies they all seem very jealous of our rates in the US. It's quite possible to make several hundred k and be around 20% federal. But everybody likes to think the grass is greener.

I know/met a few doctors who felt that tax rates were so punishing in canada that they prefer to work only 2/3 days a week.

On the other hand, for wealthy folks like on an ER forum, so much is particular to ones individual circumstance and assets. For example, my brother's property tax (toronto) is going up something like 10-15k because the tax assessor updated home values. If he were in California he wouldn't be paying any more due to prop 13. On the other hand when it comes time to sell the home, he'll probably have at least $1M in capital gains tax free above and beyond the $500k exemption in the US.

Agreed for the most part. However for us (Me & DW) That have saved 70-80% of our Nest egg over the last 35 years in POST tax accounts, we can somewhat control what our income is, and only withdraw suitable amounts from our pre tax reserves to maintain a lower tax level. We chose to do this in our earlier earning years while also contributing to our 401k's. OK we paid a higher tax then, but arguably being "DINK's" we could also well afford it then.

 

[kcowan]

Just anecdotal evidence but whenever I talk about taxes with my canadian buddies they all seem very jealous of our rates in the US. It's quite possible to make several hundred k and be around 20% federal. But everybody likes to think the grass is greener.

They also need to factor in the cost of liability insurance which is substantially higher in the US.

 

[Music Lover]

On the other hand, for wealthy folks like on an ER forum, so much is particular to ones individual circumstance and assets. For example, my brother's property tax (toronto) is going up something like 10-15k because the tax assessor updated home values. If he were in California he wouldn't be paying any more due to prop 13. On the other hand when it comes time to sell the home, he'll probably have at least $1M in capital gains tax free above and beyond the $500k exemption in the US.

Prop 13 sounds grossly unfair. I can't believe it exists.

 

[6miths]

Just anecdotal evidence but whenever I talk about taxes with my canadian buddies they all seem very jealous of our rates in the US. It's quite possible to make several hundred k and be around 20% federal. But everybody likes to think the grass is greener.

I know/met a few doctors who felt that tax rates were so punishing in Canada that they prefer to work only 2/3 days a week.

Yes much of it is grass is greener. Many folks really don't have any idea what all in costs are due to the various taxes, insurances, levies, user fees and whatever involved. At the end of the day, for most, it is hard to put a monetary value on 'home'.

For MDs, what you say may have been true in the 80s when I graduated but things seem to have come full circle over the last 3 decades. Canadian MDs pay negligible amounts for malpractice insurance and have no concern about their personal assets being at risk. Incomes are not much different, practice stresses are generally much less and MDs (along with dentists and lawyers) can incorporate and pay much lower tax rates. 'Managed care' has really kicked the stuffing out of MD morale in the US since the 90s (that is by Health Insurance companies - not Obamacare). Current governments are trying to bring things back the other way but at the moment things are pretty good for professionals north of the border.

 

[superdave]

Yes much of it is grass is greener. Many folks really don't have any idea what all in costs are due to the various taxes, insurances, levies, user fees and whatever involved. At the end of the day, for most, it is hard to put a monetary value on 'home'.

For MDs, what you say may have been true in the 80s when I graduated but things seem to have come full circle over the last 3 decades. Canadian MDs pay negligible amounts for malpractice insurance and have no concern about their personal assets being at risk. Incomes are not much different, practice stresses are generally much less and MDs (along with dentists and lawyers) can incorporate and pay much lower tax rates. 'Managed care' has really kicked the stuffing out of MD morale in the US since the 90s (that is by Health Insurance companies - not Obamacare). Current governments are trying to bring things back the other way but at the moment things are pretty good for professionals north of the border.

Interesting. I suspected as much, as Canadian doctors really don't seem to be moving to the USA anymore. As was mentioned, many doctors here just work 3 days a week. I personally know a few who retired at 55-56 or so.

 

[Music Lover]

Interesting. I suspected as much, as Canadian doctors really don't seem to be moving to the USA anymore. As was mentioned, many doctors here just work 3 days a week. I personally know a few who retired at 55-56 or so.

My doctor is very young (graduated 2014) and only works 4 day weeks. She also takes a lot of time off...I'm not sure if this is due to tax rates or perhaps she simply has a good perspective on the work/life balance.

 

[Walt34]

Prop 13 sounds grossly unfair. I can't believe it exists.

It was passed in reaction to sharply rising taxes on homes that had been bought in earlier times. In many cases people were being forced to sell their homes in order to pay the rising taxes. I doubt that anyone would call that fair either. I lived in Maryland at the time and remember seeing many newspaper articles about it.

It was passed with much anguish and gnashing of teeth not only in California but nationally, as the same issue was coming up in many places. Here's a bit of history on it: https://en.wikipedia.org/wiki/California_Proposition_13_(1978)

 

[pb4uski]

What I would call unfair is two neighbors with substantially the same properties that have the same fair value paying drastically different property taxes simply because one is a new owner and the other has lived there for a long time. Wacky.

 

[Music Lover]

It was passed in reaction to sharply rising taxes on homes that had been bought in earlier times. In many cases people were being forced to sell their homes in order to pay the rising taxes. I doubt that anyone would call that fair either. I lived in Maryland at the time and remember seeing many newspaper articles about it.

It was passed with much anguish and gnashing of teeth not only in California but nationally, as the same issue was coming up in many places. Here's a bit of history on it: https://en.wikipedia.org/wiki/California_Proposition_13_(1978)

If someone has to move because they can't afford the property taxes, that might suck and be inconvenient, but it's not unfair. Prop 13 doesn't solve a problem...it creates one.

 

[nuke_diver]

What I would call unfair is two neighbors with substantially the same properties that have the same fair value paying drastically different property taxes simply because one is a new owner and the other has lived there for a long time. Wacky.

That is true if property values are not changing much but in Silicon valley property values go ballistic and taxing people who bought a long time ago based on going rates forced them out of their homes, hence Prop 13. Forcing someone to move out of the area because property values are increasing faster than their ability to pay is also pretty unfair I think. And the county is not going to go with less tax for everyone. It's hard to comprehend but it's also hard to comprehend housing values increasing 200% in the last 7 years I think for most

Note that since ~2010 prop 13 has been modified in some counties so the PT does vary more than the max 2% that was originally legislated. So in those counties only houses purchased prior to 2010 are limited to 2% increases. That might actually be even more unfair

 

[Walt34]

What I would call unfair is two neighbors with substantially the same properties that have the same fair value paying drastically different property taxes simply because one is a new owner and the other has lived there for a long time. Wacky.

From that perspective you're exactly right. But look at it from the perspective of the guy who bought his home in 1965 for say, $15K and at the time his property taxes were (randomly trying to pick a reasonable number here) $150/year. Fast forward to 1977 and the property taxes are now quadrupled or more because "the market" now values his house at $60k.

And all this guy did was own the place and go to work every day and do his job. Now he can't retire and stay there and be content because someone else decided that he has to pay outlandish taxes. Wacky.

Rightly or wrongly that's what Proposition 13 was about.

 

[pb4uski]

From that perspective you're exactly right. But look at it from the perspective of the guy who bought his home in 1965 for say, $15K and at the time his property taxes were (randomly trying to pick a reasonable number here) $150/year. Fast forward to 1977 and the property taxes are now quadrupled or more because "the market" now values his house at $60k.

And all this guy did was own the place and go to work every day and do his job. Now he can't retire and stay there and be content because someone else decided that he has to pay outlandish taxes. Wacky.

Rightly or wrongly that's what Proposition 13 was about.

Well, if his house appreciates 400%, his property tax bill will NOT increase 400% (assuming that the grand list quadruples as well). In fact, if the municipal budget stays the same, the grand list quadruples and his appraised value quadruples then his property tax bill would still be $150.

Tax rate increases occur where the budget increases and/or your property's appraised value increases faster than the grand list, typically the former.

 

[Meadbh]

Interesting. I suspected as much, as Canadian doctors really don't seem to be moving to the USA anymore. As was mentioned, many doctors here just work 3 days a week. I personally know a few who retired at 55-56 or so.

Some of them are members of this forum, too!

 

[Danmar]

I think Victoria, BC is one of the most beautiful places in the world

Agree. Would add Canmore Alberta, where I live, as well.

 

[6miths]

Some of them are members of this forum, too!

+1

 

[Sunset]

What I would call unfair is two neighbors with substantially the same properties that have the same fair value paying drastically different property taxes simply because one is a new owner and the other has lived there for a long time. Wacky.

I think property taxes are unfair.
What it means is when you buy a house, you never 'really' own it, because if you don't pay the property tax it is taken away, but if you buy a golf club you get to keep it for decades because there is no golf club tax.
So property taxes effectively remove the concept of owning your own home or land property.

The gov't should have tax based on income, not the value of something you paid for already.

Property tax is an inefficient way to collect $$ because renters don't pay it, and the theory is the landlord pays it and collects it from the renters, but lots of issues muddle this up like rent controls.

 

[photoguy]

My brother had the good fortune of buying the biggest house he and his wife could afford in 2009 (maybe 2010) in a toronto neighborhood that would see the highest appreciation over the next few years (think +100%). However, I think all of toronto has seen strong appreciation so I'm not sure if the "extra" appreciation explains all of the tax increase (i.e. a doubling) or if there are other factors involved. AFAIK property tax works as pb4uski described in toronto.

Canadian real estate is in an interesting place right now due to very high prices, low affordability and anti foreign sentiment. Vancouver just initiated a 15% tax on foreign home buyers in order to cool their housing market:
Vancouver real estate vulnerable after tax on foreign buyers: Fitch - The Globe and Mail

Not sure if this affects non-resident citizens, but I do believe it will affect resident non citizens. Could strongly benefit anyone who wants to move back to canada.

 

[razztazz]

I think property taxes are unfair.
What it means is when you buy a house, you never 'really' own it, because if you don't pay the property tax it is taken away, but if you buy a golf club you get to keep it for decades because there is no golf club tax.
So property taxes effectively remove the concept of owning your own home or land property.

The gov't should have tax based on income, not the value of something you paid for already.

Property tax is an inefficient way to collect $$ because renters don't pay it, and the theory is the landlord pays it and collects it from the renters, but lots of issues muddle this up like rent controls.

Sorry but it's way more complicated that "owning something". The earth cannot be owned. Nobody creates it. It is a commons. It has to be managed.

Historically only "The Sovereign" could own land and everything on it and in it. Feudal system. Snatch an apple, trap a rabbit and you could get executed for eating The Kings's (Sovereign's) apple.

In the modern era as we all know The People are The Sovereign. It is ultimately The People's Land. the "owner" cannot be The Sovereign. If you were George Foreman and I could simply invade your back yard, and since war is a historically recognized legitimate reason for taking land... now I'M THE KING!

This is Western Law since way way back. It is very obscure legalese to say the least, to most people and probably most lawyers, but that is why things are the way they are.

When other people can simply create new land into existence then we can manage the supply some better way.


Besides real estate (real here comes from The Realm ie The King's stuff) can make you rich without you doing anything ie deserving it. It's all the other components of society moving that makes real estate worth what it is sans any improvements. If you want the unwarranted wealth why bitch about the taxes? You don't like the taxes I guess it's not really worth much?

Owners always and everywhere want high real estate prices but low real estate values.

 

[ShokWaveRider]

I agree property taxes are unfair a 50% of ours goes to a school system we have never and will never use (No Kids). Now that is unfair!

 

[Music Lover]

I agree property taxes are unfair a 50% of ours goes to a school system we have never and will never use (No Kids). Now that is unfair!

Everyone benefits from an educated population...

 

[kcowan]

Canadian real estate is in an interesting place right now due to very high prices, low affordability and anti foreign sentiment. Vancouver just initiated a 15% tax on foreign home buyers in order to cool their housing market:
Vancouver real estate vulnerable after tax on foreign buyers: Fitch - The Globe and Mail

I evaluated buying an apartment on Lonsdale Key to downsize from our 2000 sq.ft. rental penthouse in West Van. Here is the listing on zolo.ca

Price $1.3 million
Down $65000
Mortgage $5530 25 years amortization - 5 year term (maximums allowed)
Taxes $315
HOA $465
Total $6300 per month
Size 1035 sq.ft. on the 12th floor
Age 6 years

Although this place has nice water views and is close to restaurants, shops and transit, you can readily see the insanity of RE in Vancouver. Mortgage is not deductible, although capital gains are tax free on principle residence (no limit).

(Two 9-story condo apartments are being built in front of this building. So noise and disruption as well as some blockage of water views.)

 

[pb4uski]

I think property taxes are unfair.
What it means is when you buy a house, you never 'really' own it....
Property tax is an inefficient way to collect $$ because renters don't pay it....

I agree property taxes are unfair a 50% of ours goes to a school system we have never and will never use (No Kids). Now that is unfair!

Egads.

Let's presume that anyone who buys a property is not so ignorant and knows that in order to keep the property that they have to pay their property taxes.... if they think that is unfair then just don't buy! Similarly, if one doesn't think that property taxes are fair because they are used to fund education, then just don't buy! Life is unfair.. get used to it.

 

[ShokWaveRider]

Egads.

Let's presume that anyone who buys a property is not so ignorant and knows that in order to keep the property that they have to pay their property taxes.... if they think that is unfair then just don't buy! Similarly, if one doesn't think that property taxes are fair because they are used to fund education, then just don't buy! Life is unfair.. get used to it.

Second time you read something (of mine) and took it the wrong way. I said paying 50% is unfair not paying the taxes. I am offended by your post.