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Tax loophole could cost Windsor millions - Invest Windsor Ontario Real Estate

March 12, 2010

WINDSOR, Ont. — Windsor risks losing millions of dollars in annual tax revenues if it doesn't move quickly to stem the tide of apartment buildings being converted to condos, a city advisory group is warning.

The conversions change nothing in the use of the units -- they're still being rented out -- but by exploiting a loophole in provincial legislation, the owners of the buildings are realizing a lucrative tax break at the city's expense.

"There's going to be a stampede -- it's a no-brainer," said Domenic Giglio, whose family's two multi-residential rental holdings were registered as condos in January. The cost of converting can be high, including hefty fees charged by the city, but Giglio and others said the resulting tax windfall means the average payback period is a year or less, and then the big savings begin.

It means a big financial hit to Windsor's tax department -- revenue that must either be absorbed by reducing overall city spending or raising taxes on everyone else, with residential ratepayers having to shoulder the bulk.

Last year, 11 apartment buildings containing 765 units got approval from the city to convert to condos, translating into an annual tax loss to the municipality of close to $600,000, according to an administrative report. Ten of those buildings are owned by Windsor's biggest landlord, Boardwalk REIT Properties Ltd., which has an application for a similar number of conversions this year.

Other apartment building owners are joining the rush.

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