Property Tax Deferment
Quinn Waddington - Jan 10, 2017
You have likely heard that government of B.C. has raised the homeowner grant threshold from $1.2 million to $1.6 million. This is a 33% increase after already increasing it 20% last year from $1 million.
Property Tax Deferment
You have likely heard that government of B.C. has raised the homeowner grant threshold from $1.2 million to $1.6 million. This is a 33% increase after already increasing it 20% last year from $1 million. There will be lots of debate about the merits, costs and benefits of the grant and continually increasing the amount, especially as we head into another election. However, there is another, lesser known, government program that was designed to help those already struggling with increasing property taxes by deferring them.
The Regular Program allows those 55 or older and those with disabilities, along with a few other qualifications, the ability to defer their property taxes indefinitely as long as they maintain at least 25% equity of the assessed value. The best part of this loan is that the government will lend you the funds to pay your property tax at a rate of 0.70%. It would be impossible to find a rate lower than this to borrow funds.
The Families with Children Program allows those with children under that age of 18, along with a few other qualifications, the same property tax deferment, but with a slightly higher interest rate of 2.7%. Still very low and likely lower than most fixed mortgage rates at the moment.
Both of these rates are tied to the prime rate (Prime – 2% for the Regular Program and Prime for the Families with Children Program) so the rates will fluctuate over time but regardless of the rate, it will still be relatively low, especially for those over 55 years of age.
When the time comes to sell your house, you will first need to pay back your deferred property taxes plus the interest you have accrued but there are options out there to ensure you are doing much more with your money than the 0.7% you are being charged. At the 2.7% interest rate, insuring you make more by investing is a bit trickier so you need to be willing to take a long-term view of your investments.
For those over 55, simply adding the funds to a GIC and receiving 1.25-1.5%/year will mean you earn 0.55-0.8% on top of your loan. If you can and want to take a little more risk you can look at fixed income or even equities to earn even more on your money. If you have room in your RRSP or TFSA, then adding the funds you would have used to pay your property taxes will give you tax savings that will increase your investment gains even further.
Please contact me to discuss your investment options and for more information on the tax deferment programs please follow this link.