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

Q. Are there major real estate markets around the world considering property tax increases to offset municipal revenue losses as a result of the pandemic?

A. Many municipalities are looking at raising property taxes in order to meet budget shortfalls caused by economic shutdowns related to the Covid-19 pandemic.

For example, “just about every municipality across Canada” is having some conversation about whether to raise property taxes, according to Romana King, director of content at Zola.ca, an online national real estate marketplace in Canada.

More: Will There Be Property Tax Proposals on the Ballot on U.S. Election Day?

Budget talks happen annually, but this year they have taken on a different tenor, she noted.

“The municipalities are trying really hard to figure out how to close up the budget gaps,” Ms. King said. “They have to find a way to close those gaps or services have to be cut.”

For example, in Vancouver, officials are considering raising property taxes by up to 5%, according to the city. That increase could have been bigger.

“In mid-December of 2019, the Vancouver City Council was already discussing an increase in property taxes,” Ms. King explained. “These discussions explored property tax increases that ranged from 5% to 8.2%.”

The reduction in the rate of the increase acknowledges the hardship residents have encountered while still allowing for an increase in government funding, she said.

However, Vancouver’s tax rate would remain one of the lowest in North America, Ms. King added. Property owners there pay a rate of 0.26%—$2.56 for every $1,000 of the property's assessed value.

In Ottawa, Canada’s capital, the city council is proposing a 3% property tax increase, according to Ms. King. The current property tax rate there is 1.02%.

In both cases, final decisions won’t be made until the end of the year.

More: How Do Homestead Exemptions Work in Washington State?

Meanwhile, in New York, the state legislature is again considering a pied-à-terre tax in cities with more than 1 million people to increase property tax revenue. The proposal, which would have the greatest impact in New York City, was first floated in 2014, and again in January of last year.

“It’s been brought back to life, mostly because there’s a big hole in the budget,” said Peter Zinkovetsky, an attorney with New York City-based Zinkovetsky Law Firm.

The tax would apply to homes that are not the primary residence of the owner, or that aren’t inhabited by a child or parent of the owner, Mr. Zinkovetsky noted. Properties that are rented out full time would also be exempt.

More: What’s Behind Rising Property Tax Assessments in New Orleans?

The additional levy would apply to one-, two- and three-bedroom secondary residences valued at more than $5 million, according to the bill. A rate of between 0.5% and 4% would be applied on the market value above $5 million.

In addition, condos or co-ops with an assessed value of $300,000 or higher would be taxed at a rate between 10% and 13.5% on the assessed value above $300,000.

Email your questions to editors@mansionglobal.com. Check for answers weekly at www.blakcan.com.

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