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Percent on commercial buildings

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Toronto charges a property tax rate of 4 percent on commercial buildings while Markham charges a tax rate of 3 percent on the same type of building. Yet competition for tenants ensures that the rent charged for places on the north side of Steeles Ave does not differ from the rent charged for a place in an otherwise identical building on the south side of Steeles Ave. Therefore, at an interestrate of 4 percent the equilibrium selling price of the first building (in Markham) will be about 115 percent of the price of the second building (in Toronto).

Reference no: EM131298873

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