Real estate listings in New Brunswick routinely display property-tax amounts on homes that are several hundred dollars less than what a new buyer would pay, but Realtors insist the practice is not misleading to consumers.
Property taxes can be the second largest expense in owning a home after mortgage payments, and the New Brunswick Real Estate Association says its rules require tax information to be displayed with each listed property for the benefit of prospective buyers.
But listings only show what a current owner is being billed in property tax, not what a new buyer will pay.
“Our Realtor code makes us ensure we have the proper tax information we’re using for the property, and that information would be the tax being charged on the property for the current year,” said Ryan Davison, president of the association.
That can be an issue for people who are house shopping, because a large percentage of homes for sale in New Brunswick belong to owners who pay discounted property tax amounts that are not available to the next owner.
The New Brunswick government has a policy it calls “spike protection” that slows the growth of property taxes on a house during periods when property values are escalating rapidly.
Real estate ads in New Brunswick show prospective buyers what can look like surprisingly reasonable property taxes on houses that catch their eye. What the ads don’t say is the tax information often applies only to the current owner and expires after a sale.
But that protection, and the tax discount it generates, is for the current property owner only and evaporates following a sale.
In Moncton this week, a listing for a house for sale on Evergreen Drive that has experienced a 107 per cent increase in its assessed value over four years shows its “annual property taxes” to be $3,471.
But that is the discounted, spike-protected amount belonging to the property owner. Taxes on the home for a new owner, assuming the same assessed value, will jump to $4,922.
It is 41 per cent higher than what is being shown to prospective buyers in the listing.
Real estate listings that show property tax amounts on houses that new buyers will not qualify for are now widespread in New Brunswick.
On Monday, Tuesday and Wednesday this week in Moncton, Dieppe and Riverview, 23 houses on their own lots were newly listed for sale. In 16 of those new listings, about two-thirds of the total, property details shown to potential buyers included spike-protected property tax amounts.
On 14 of the houses full property taxes for a new owner will be more than $500 higher than what is listed, including six where the difference is more than $1,000.
Davison said it is the responsibility of individual real estate agents to explain to buyers that property taxes on a home they are interested in could be higher than what is shown in a listing.
But there is no requirement to provide in the listing what would be an easily calculated undiscounted property tax amount that buyers will actually face.
“I don’t believe it’s misleading,” Davison said about agents showing new buyers current, discounted tax amounts that will not apply to them.
“I think they need to make sure your buyer understands what they’re seeing. It is a snapshot of the property in the current day.”
New Brunswick’s real estate industry is co-regulated by the association and the Financial and Consumer Services Commission of New Brunswick.
However, commission spokesperson Morgan Daye said how property taxes are presented to the public on listings is not an area it is responsible for.
New buyers often unaware
Not realizing a property tax bill will jump when a house sells can cause problems for new buyers. It did for Julia and Konner Bourgeois.
The couple bought their first home in Saint John 19 months ago. At the time it had an annual property tax bill of $3,126, but when their first tax levy arrived a few months later it was for $4,203.
About half the difference was caused by an increase in the assessed value of the house and half by a tax discount enjoyed by the previous owner that expired with the sale.
That forced the couple to make a $1,000 lump sum payment to make good on the tax bill and then increase payments to their bank by $90 per month to cover future payments.
“We, I don’t think, understood that when a home sells there isn’t going to be a cap on the property tax,” Julia said in an interview last January about the couple’s experience.
“That definitely came as a shock to us.”
Rob Dipiero is a Saint John real estate agent who consistently warns in his online posts that owning a house is more than a mortgage payment. He advises new buyers to fully evaluate all of the expenses they will be taking on, including what the annual tax bill is likely to be.
In an interview, Dipiero said if a house carries an expiring property-tax discount and it sells for a price above its current assessed value, this year’s tax bill may not be a useful reference for what a new owner will face or can afford.
“I would prepare them for that.,” Dipiero said. “That there would be an increase.
“From a buyers perspective you have to think about all the different possibilities.”
