Wednesday, August 16, 2006

How Seniors May Defer Property Taxes in B.C.

The cost of property taxes can be significant for seniors on fixed incomes. This can be particularly troublesome for homeowners whose property values have gone up significantly more than the average increases in values, such as owners of lakefront or oceanfront property in British Columbia. There are many seniors who have had modest incomes and lifestyles over the years, whose property values and property tax burden have increased considerably. What if a senior can’t afford to pay the property taxes, but doesn’t want to sell his or her home?

In British Columbia, you can enter into an agreement with the provincial government to defer property taxes on your principal residence if you are 60 years or over [since writing this post, the age has been lowered to 55 years or over], have lived in British Columbia for at least one year, are a Canadian Citizen or Permanent Resident, and have at least 25% equity in your property. The agreement is registered against the title to your home, and the provincial government pays the taxes. When the agreement ends, you repay the province the amount of the property taxes, plus interest. The interest is relatively low.

If you wish to sell your house, you must pay the deferred property taxes and the interest. The Land Title Office will not allow the title to be transferred unless the amount owing under the agreement is being paid out. There is an exception for property transferred at death to a surviving spouse.

I was advised by a representative of the Ministry responsible for the deferment program that the amount must be repaid if an agreement for sale is registered on title.

Persons under 55 with disabilities may also be eligible to defer the property taxes.

Because the interest rates are low, the land tax deferral program may be preferable to a reverse mortgage.

The Ministry of Small Business and Revenue has more information about the property tax deferment program here, and you can read the Land Tax Deferment Act, RSBC 1996, c. 249, here.

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