Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.

Q. How are property taxes determined in Canada? I read that there is a national proposal to implement a new tax on home sales.

A. There are no current proposals for a federal homeowners tax, according to Romana King, director of content at Zola.ca, an online national real estate marketplace in Canada and its largest independent brokerage.

Although there have been some rumors about a national capital gains tax, the government is not considering any such tax. She believes the federal government would only propose the tax as a “last resort.”

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“I’m not going to rule it out,” Ms. King explained. “But from everything that the federal government has put out…[they] are not proposing this.”

What the government is doing is an affordability study, which is being led by the Housing Research Collaborative at the University of British Columbia, she noted. The project includes reaching out to a large number of community stakeholders throughout the country and asking them to explore options and report back.

“This is part of a very large, broad initiative to find all solutions,” Ms. King explained. “If you want a robust policy, you need to look at all angles. That does not mean you are going to implement a tax on capital gains.”

Property taxes across Canada are determined by local municipalities and provinces. There are some fears that rates for next year's tax payments could rise because of budget shortfalls caused by the Covid-19 pandemic.

“Municipal property tax increases are being proposed, or at least floated,” Ms. King said. “And they are significant. We’re talking anywhere from 3% and 5% in one year. Anytime there has been a rise like that, there’s been huge blowback.”

On a C$1.5 million (US$1.14 million) house, the property taxes could be C$5,000 to C$6,000 a year, she noted.

More: Will Property Taxes Go Down If Home Values Fall?

“If you add 5%, that’s huge,” Ms. King said.

Those changes will not be determined until later in the fall, she said, adding that there might be initial announcements in September.

Click to Read Tax Experts Share Answers and Advice for Readers’ Pressing Tax Questions

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