Taxes make up a shocking $94,000 of the price of the average new single-family detached home built in Kelowna.
“Housing affordability is an issue we hear about often and it’s a top concern for all Canadians,” said Cassidy deVeer, president of the Central Okanagan branch of the Canadian Home Builders Association.
“When buyers hear their homes include more than $94,000 in tax, you get their attention.”
The association released the figure Wednesday as part of an awareness campaign on housing affordability in advance of the federal election in October.
The association’s motives are two-pronged.
It wants to let the public know the hefty tax bill they pay when they buy a new home.
In Kelowna’s case, the $94,000 in taxes represents more than 11% of the price of a new single-family detached home, which averages around $850,000.
The tax, and the home’s price, may sound like a lot, but that’s what new construction costs.
New single-family detached homes also tend to be built big and expensive, typically with a 2,400-square-foot house on a 6,000-square-foot lot with four bedrooms, three bathrooms and nice fixtures and finishings.
The average selling price of a used single-family detached house in Kelowna is about $713,000, the average used townhouse costs $517,900 and the average used condominium sells for $362,700.
The average monthly rent for a one-bedroom apartment is $1,280.
The Central Okanagan branch of the association is also using the tax numbers to take the federal government and political parties to task as the general election nears.
The housing market is soft right now, and the association wants to know what plan the governing Liberals and the other parties have to replace the tax revenue, which is used to help run the country.
“There is a ripple effect when sales and new homes are postponed or cancelled,” said deVeer.
“It’s not just the homebuilders, but all those who service and supply the industry. A flooring supplier representative told me his residential sales are way down. Based on this report, we can see there is a direct impact on government revenues as well.”
The association commissioned accounting and consulting firm MNP to summarize the fees and taxes levied on a new-construction single-family detached home in nine B.C. communities.
In Kelowna, the tax and fee revenue going to the municipality is $30,908, $20,800 goes to the province and $42,500 to federal revenues for a grand total of $94,208.
The figures take into account all taxes and fees levied directly on the construction and sale of new homes and additional government revenues generated through income taxes and taxes on construction.
Additional revenues were the income tax paid by those employed in building homes and provincial sales taxes generated from the purchase of materials.
The report did not take into account the current Energy Step Code charges.
“When discussing housing affordability, it’s important people know how much the cost of a home is tax,” said deVeer.
“Obviously, governments need revenue and we are certainly not advocating there shouldn’t be any tax, but tackling housing affordability will require government and industry to work together.”