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Posted Apr 23, 2010, 12:59 PM
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Mooderator
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Join Date: Jan 2002
Location: Aylmer, Québec
Posts: 21,387
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http://www.obj.ca/Opinion/The-Marketplac...pensive-apartment-in-western-Quebec%3F/1
Quote:
Want to buy the most expensive apartment in western Quebec?
Published on April 5th, 2010
Michael Prentice
Property tax breaks could make downtown Gatineau real estate hotter than ever
Are you looking to buy a new condo apartment in the urban core, and want to save thousands of dollars a year in property taxes? Has the City of Gatineau got a deal for you!
It is part of an effort to spur construction in the heart of the old city of Hull. And it means buyers of new apartments in downtown Gatineau should save tens of thousands of dollars in property taxes over the next decade.
Here’s how it works: If you buy a brand-new apartment in a multi-storey building in the heart of Gatineau, your property taxes will be about one-fourth of their normal level for the first 10 years. At current rates, that is a saving of about $3,000 a year on an apartment costing $300,000.
The property tax break – which attracted little attention when Gatineau approved it in 2008 – is designed to trigger construction and bring more residents into the city centre. Downtown Gatineau is where thousands of federal public servants work, just across the river from Parliament. It’s known for its lively bars.
But it lacks quality housing, and too much of it is now under pavement and serving as parking lots.
The tax break applies to owners of apartments in new buildings in an area known as the island of Hull. The area is on the Ottawa River, from rue Montcalm in the west to Highway 5 in the east. It extends northwards almost to the Hilton Lac Leamy Hotel.
The tax break is a significant factor for anyone contemplating buying an apartment, and could influence some buyers to opt to live in Gatineau if they want to be downtown but can’t afford downtown Ottawa, analysts believe.
Indeed, developers of a planned $40-million luxury apartment building in the heart of Gatineau have heavily emphasized the tax savings in the project’s marketing materials. Construction of the building, known as Le Cartier-Wellington, is scheduled to begin this fall and the first owners should take residence in spring 2012.
The 14-storey building will be at 150 Wellington St. – currently a parking lot – two blocks from the Ottawa River and steps from Promenade du Portage, with its restaurants and nightspots. The sales office is scheduled to open in May.
Developer Raymond Chauvet says he would likely have gone ahead with the project, even without the incentive offered by tax savings. “But the tax savings give us a very important competitive advantage,” he said, compared with new apartment buildings outside the Gatineau core and in Ottawa.
The property tax break is among reasons cited by many of those who have already expressed interest in buying an apartment in the building, says Mr. Chauvet. “Much of the interest has been from public servants working in the area,” he said. “Many are aged 35 to 40, and there are more single women than single men. There are also empty-nesters and investors.”
Living in Gatineau also has obvious appeal for francophones and French-speaking English Canadians, he adds.
So far, there has been no sign of a rush to convert other nearby open-air parking lots into new highrise apartment buildings, despite the property tax break. But Mr. Chauvet says that may be because parking lot owners have been waiting on the federal government to decide on the location for a new office block in the area.
The 140 apartments in the building will range in price from less than $200,000 up to $1 million. The developer says he already has a buyer for the $1-million penthouse, which will have 2,300 square feet of living space and spectacular views of the Ottawa skyline and the river.
He declined to name the buyer of what is likely to be the most expensive apartment ever purchased in western Quebec. Property tax savings on the penthouse are expected to be in the range of $10,000 a year.
The City of Gatineau says the purchaser of a new apartment assessed to be worth $250,000 will save almost $2,500 a year, at current property tax rates. In this example, property taxes payable in 2009 would have been $823. Taxes without the discount would have been $3,292.
The break amounts to 75 per cent of the assessed value of each apartment, but does not apply to the assessed value of the apartment owner’s share of the land. For most apartment owners in eligible buildings, the tax break will be a little more than 70 per cent of the combined assessment for apartment and land.
The tax break is transferable when an apartment owner sells, and it exists for 10 years, regardless of change of ownership.
But does the tax break make the cost of living cheaper in a new apartment in downtown Gatineau than in downtown Ottawa?
The answer depends on several things. For a start, income taxes are higher in Quebec than in Ontario, particularly for single people. In Quebec, the personal income tax rate is 20 per cent on taxable annual income between about $39,000 and $77,000. In Ontario, it’s 9.15 per cent on taxable income between about $37,000 and $74,000.
Without the tax break, property taxes are about the same on both sides of the river. So there’s a huge saving there for anyone who jumps at the City of Gatineau’s offer.
That leaves the actual purchase price of the apartment, which is the biggest factor in almost everyone’s cost of living. Construction costs are about the same on both sides of the river; land prices tend to be higher in Ottawa than Gatineau.
Value is hard to measure, but it starts with the price per square foot. You need to check that out for yourself in any comparison between the cost of living in one apartment and another.
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