Why Taxing People More Will Not Fix the Housing Crisis

Written by Chris Perkins. Exploring non-resident deed transfer tax and the housing crisis. 

I was recently approached by Krista Gallagher, Halifax-Chebucto MLA with the Nova Scotia NDP. She asked me about my views on the non-resident deed transfer tax, and I discovered it is something I’m quite passionate about. What was going to be a pointed email turned into a piece focused on the bigger issue the tax is supposed to alleviate: A housing crisis driven by a lack of supply. 

The non-resident deed transfer tax is currently 5% of a home's purchase price and applies to buyers who are not residents of Nova Scotia and do not intend to become residents within six months of purchase. The government has proposed increasing this tax to 10% starting April 1, 2025. I have a lot of questions about the non-resident deed transfer tax. I’m curious about the revenue it has generated for the province since its inception and how the revenue has been allocated. I wonder if the government had data on what non-residents were purchasing before the tax was introduced. I would like to understand the impact it has had on home sales and why such a substantial increase to the tax is being proposed now—beyond simply trying to offset a budget deficit. I don’t believe we can simply tax our way out of a deficit or use taxation as a viable solution to our housing crisis.

Despite my efforts to explain the non-resident deed transfer tax to those outside the province, it continues to alienate other Canadians. Given the current political climate, this is the last thing we need. The message being sent is: “You’re not welcome here” or, at the very least, “We don’t want you investing in our province.” I counter this by explaining that we do, in fact, want them here, which is why there’s a six-month window to become a permanent Nova Scotia resident to avoid the tax. However, for many, this requirement is not feasible, and it rarely works as a convincing argument.

From my perspective, non-residents looking to buy in Nova Scotia were primarily searching in a price bracket that was already out of reach for the majority of our population. Most of the buyers I worked with were looking for vacation homes—typically waterfront properties or those near tourist attractions like restaurants and beaches. These clients often had budgets exceeding $1M. They were not competing for semi-detached homes in Sackville, for example, which is where the real market challenges exist.

As shown in the graph below, nearly 50% of our sales in HRM occur within a $200K price bracket, simply because that’s what most people can afford. This bracket represents first-time homebuyers and those looking to upgrade from a semi-detached home or condo to a detached home. If the goal is to impose a 10% deed transfer tax, perhaps it should be applied in a price bracket experiencing the highest demand. A tiered system, based on property value and market pressure, would be a more targeted and effective approach.

I would expect the current iteration of the non-resident deed transfer tax to have little or no effect on the segment of the market that needs it most. However, it is having a noticeable impact on high-end properties, such as luxury condos and waterfront homes—neither of which contribute to the housing crisis.

Speaking from my experience at The Roy, a luxury condo building in Halifax, the target market for condos over $1M has shrunk significantly. The foreign buyer ban has already excluded many prospective purchasers, and the 5% deed transfer tax has deterred countless others—let alone the prospect of a 10% tax. The government may argue that if someone can afford a multimillion-dollar property, they can afford to pay $100,000+ in deed transfer tax. But that completely misses the point. It’s not about ability; it’s about willingness. Buyers will simply invest elsewhere, avoiding Nova Scotia in favor of markets with fewer financial barriers. This not only depresses property values in higher price brackets but also reduces the economic benefits of their spending in the province, along with the property tax revenue they would generate.

If the goal is to generate revenue from real estate, the focus should be on an uncapped property tax. To my understanding, Nova Scotia is the only province in Canada with a cap on property taxes. It’s baffling to me that homeowners who remain in their properties long-term benefit from a tax cap, while those who move are immediately reassessed, ironically making housing less affordable. This system creates two major issues. First, it results in an uneven distribution of the tax burden among Nova Scotia residents. If everyone paid the same rate based on their property’s value, we could likely reduce overall property taxes for everyone, making them more equitable and affordable. Second, it discourages homeowners from selling, fearing reassessment. When people hesitate to move from homes in the $400,000-$600,000 range to larger properties, it creates a bottleneck in the segment of the market where we desperately need more supply. We also need to think about where new supply comes from. 

At a recent housing seminar, David Graham of Atlantic Developments explained that he has primarily built condominium (owned) units rather than rental apartments. For his latest project, he has been forced to build a rental building because condominium construction is no longer financially feasible. While the government has introduced incentives for rental developments, they have done little to support builders looking to construct condos or single-family homes. Construction costs have risen by 60% over the last four years, with taxes, levies, and fees now accounting for approximately 30% of total construction costs. These costs are further exacerbated by delays in the approval process. If the goal is to address our housing crisis, the solution should involve incentivizing developers and builders rather than attempting to tax our way into an unsustainable fix. A profitable builder will build more homes, thereby increasing supply.

Additionally, we are constructing the wrong type of housing. As a parent of a four-year-old and a Dachshund owner, I don’t want to live in a high-rise apartment. In England, row houses are the norm—offering three bedrooms, a couple of bathrooms, and a reasonably sized backyard. This type of housing meets the needs of families while being more affordable to build than standalone homes, making them attainable for a larger portion of the population. Sean Cathcart, Senior Economic Analyst with the Canadian Real Estate Association, refers to this as the “Missing Middle.” Instead of prioritizing estate lots or steel towers, we should focus on building more affordable housing that better serves young families.

The non-resident deed transfer tax is a political maneuver designed to give the illusion that the government is addressing the housing crisis. In reality, it will have little to no effect on the market segment that needs help the most. Additionally, it fosters division within Canada, alienating potential investors at a time when national unity is more important than ever. This tax also reduces potential revenue from annual property taxes and consumer spending in the local economy. While I can’t quantify the exact financial impact, I wouldn’t be surprised if the economic loss—particularly for local businesses—outweighs the government revenue gained from a 5% or 10% deed transfer tax to non-residents. Taxing fellow Canadians who want to invest in Nova Scotia is not a solution; it is yet another problem.

Speaking of problems, here's another of my recent articles about the potential tariff impact to our local real estate market. 

What do you think the solution to our housing crisis is?  Leave a comment below or send Chris Perkins an email at chrisperkins@cbmaritime.ca