Vancouver property tax deferrals increase 5 fold in 10 years
The tax deferral program is unfair in its current form, say some experts
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The number of Vancouverites deferring their property taxes has increased five-fold since 2005 but some commentators say the provincial program needs some tweaks to justify it.
About 6,316 people in Vancouver deferred their property taxes in 2016, up from 1,260 in 2005, according to the City.
The program allows homeowners to delay paying their property taxes indefinitely as long as they pay the annual interest rate of 0.7 per cent for those 55 years or older, or 2.7 per cent for those who have children.
More than $137 million had been deferred – and not yet repaid – in property taxes in B.C. as of 2015, according to the Ministry of Finance.
It’s an effective program that ensures homeowners are not forced out of their house due to rising real estate prices, but it does little to help those who cannot enter the housing market at all, said Paul Kershaw, founder of the advocacy group Generation Squeeze.
The group champions the needs of Canadians under 35 years old.
“We have to remind ourselves that the people who are most losing out are not those who are already in the housing market. It is people who can’t get into the housing market or they are having to take on really large debt levels.”
Even the interest rates, where seniors pay under one per cent and families pay almost three per cent, show preferential treatment for the older generation, he pointed out.
“It seems counterintuitive because the very group that reaps the most benefit from the escalation of home values are those who have been in the housing market for longer and very often it is those who are 55 or older.”
Architect and urban planner Michael Geller says the government should take it one step further and qualify households for property-tax deferral based on income or wealth.
“Keep the program but make it means tested, against income or assets,” he said.
“Then, I think, it will end up being used primarily by those in greatest need.”
But until that happens, Geller says everyone who qualifies for the program should take advantage of it, because it makes good money sense. He confirmed to Metro he defers his own property taxes.
“My advice to people, especially those who are genuinely concerned about paying their tax, is to take advantage of the program,” he said, adding that people in the tax deferral program are essentially borrowing money from the provincial government.
Geller says the steady uptake in the program is not surprising, given the increase in the property tax rates and house values.
“There are a lot of people who are facing property tax bills of 5,000 a year and especially when they no longer qualify for the homeowner grant, if you look at that in after-tax dollars, it's quite significant.”
The province reimburses municipalities for the money they lose from deferred property taxes. The tax deferral program for those 55 years and older was introduced in 1974 and the families-with-children version was created in 2010.