Young homebuyers shocked New Brunswick property tax protections don't apply to them
First-time buyers routinely forced to pay hundreds of dollars more in taxes than neighbours
Cathy Foote and her husband have been married for nearly four years and in 2022, with the help of family and their own savings, they gathered enough money to buy their first home in Saint John.
Last year, that house was one of 11 in the city assessed by Service New Brunswick to be worth $242,700.
But while the average municipal property tax bill on the other 10 houses was $3,232.68, Foote's tax bill was $649 higher— at $3,881.74.
"That is significant for us. That's like groceries for a month or two," Foote said about the higher tax bill.
"We are trying to get our feet under us. We're trying to pay off student loans and trying to start our careers, and it does make a big difference for us."
Residential property assessments have escalated rapidly in New Brunswick over the last four years and that's been forcing property taxes up for nearly all homeowners.
But increases have been most extreme on new homebuyers like the Footes.
New Brunswick has a policy it calls "spike protection," where property taxes on large assessment increases must be applied gradually, over multiple years, by a maximum of ten per cent per year.
That slows the implementation of tax increases on homeowners whose assessments jump sharply in a short period of time. However, the protection disappears if a house is sold to new owners.
For young couples just entering the housing market, that means getting saddled with higher property tax bills than neighbours pay, sometimes by several hundred dollars.
On Saint John's Meadowland Terrace, Coun. Gerry Lowe marvels at taxes the city levied last year on a row of seven nearly identical townhouses.
Six of the units were covered by the province's spike protection law and were billed under $2,600 each.
However, the seventh unit was bought by a young couple in 2023 and had lost its spike protection. The owners were charged $600 more in tax than every other unit in the row because of that — just over $3,206.
Lowe wants to make it clear it is the province's tax rule to blame and not something the city is responsible for.
"It is a provincial thing," said Lowe. "It's not something the city of Saint John has generated."
Property taxes pay for municipal services like police and fire protection, road maintenance, snow clearing and other services, and Lowe said it makes no sense to him that one house in a group of virtually identical houses would have to pay hundreds of dollars more than others for those same services.
He believes the provincial spike protection policy is well-intentioned, but is causing unfairness among taxpayers and making it harder for young buyers to afford their first home.
"They're probably the last people you would want to have to pay more," said Lowe.
"It's unfair. Being a homebuyer for the first time, you're worried about your money. I hope it is something the province can rectify and solve."
Konnor and Julia Bourgeois hope so, too.
They've been married for three years and bought their first home in Saint John in late 2023 after saving up enough for a down payment.
As a former renter, they said they had never heard of "spike protection" and were stunned when it fell away and their first property tax bill in 2024 was $1,076 dollars higher than the previous owner had paid in 2023.
That forced them to make a lump sum payment with their bank to make good on the tax bill and increase their monthly mortgage and tax withdrawals by $90 to cope with the new tax bill.
"That definitely came as a shock to us," said Julia.
Their property is one of six in the city in 2024 that was assessed to be worth $262,800, but was the only one of the six without spike protection.
Consequently the home's municipal tax bill was the highest of the group, $615 more than the average tax bill of the other five Saint John houses of identical assessed values.
That elevated tax bill is still having repercussions for the couple.
They now have an eight-month-old daughter and have decided they will have to cut Julia's maternity leave short to help the family's finances.
"It is a big difference," Julia said about the extra money they are having to spend monthly on their property tax bill.
"Just today we decided I'm going to go back to work before her first birthday — when we had been planning on me going back to work after her first birthday."
The higher tax bills for new homeowners in New Brunswick are not a temporary problem and can persist as a premium cost to new homeowners, above what others pay, for several years.
In the Footes' case, the assessment on the house they bought has risen 61 per cent since 2021.
The absence of spike protection on the property means their tax bill over the first three years is already approaching $1,681 more than what the previous owners would have been made to pay, were they still there.
That includes $614 more in taxes for the Footes in 2023, $645 more in 2024 and a projected $422 more this year.
Last year, during New Brunswick's election campaign, Susan Holt promised an overhaul of New Brunswick's entire property assessment and tax system by 2026, to make it more "affordable, fair, competitive and transparent where everyone is paying their fair share."
That review is underway and is being conducted by Service New Brunswick and Local Government Minister Aaron Kennedy.
A request to interview Kennedy about whether the operation of the spike protection policy is part of that review was not granted.
However, Mark Taylor, a spokesperson for the government, defended how the policy works and said in a statement that "the objective" of spike protection is to "maintain stability for existing property owners," not to be concerned about whether new homeowners are being made to pay hundreds of dollars more in property tax than neighbours.
"Buyers are, or should be, aware when they are buying a property that they are paying market value," Taylor's statement said.
ABOUT THE AUTHOR
