A property tax expert is warning about the B.C. government’s recent changes to its property tax deferral program and its impact on seniors.
The provincial government allows eligible homeowners to defer their annual property taxes, essentially taking out a loan that is repaid when the home is sold.
However, in the latest budget, the BC NDP government overhauled the program with significant consequences.
“What I fear is folks such as our seniors in our communities won’t understand the math,” Paul Sullivan with Ryan Tax Firm said.
The interest rate was hiked from prime minus two per cent to prime plus two per cent.
However, the biggest change is how that interest is calculated. Instead of simple interest, it now compounds like a mortgage and the impact can be dramatic.
Under the old system, a homeowner would lose about seven per cent of their equity after deferring taxes for 17 years.
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Under the new program, that number is roughly 10 times higher. The same homeowner could now lose up to 70 per cent of their equity.
According to Sullivan, seniors, who make up the majority of those using the deferral program, haven’t been clearly informed about what these changes mean.
“I think a lot of people in the program are there because they need it,” he said. “And they need to go in with their eyes open and understand the position they’re putting themselves into.
“The tax debt and the interest cost will take you to the point where you must sell your home, or at least you cannot qualify for any more debt at year 17.”
At the time, Finance Minister Brenda Bailey said the changes were meant to prevent people from gaming the system.
B.C.’s Seniors Advocate said the change in the recent budget is enough for them to draw attention to the issue.
“Most of us don’t want to accumulate any more debt, certainly when we’ve paid off most or all of a mortgage,” Dan Levitt said.
“We are concerned that we will see less people using the property tax deferral program than we have in the past, based on these changes that were made.”
Most seniors need this to be able to keep there homes. People like max avelli should be cut off the system.
useless NDP government
“We are concerned that we will see less people using the property tax deferral program than we have in the past, based on these changes that were made.”
Duh.
That is the whole point of the changes.
Who wouldn’t take prime less 2% and invest the extra money in investments at a higher rate.
That how seniors (like me) have been “gaming the system for years.
Bottom line; no government cares about seniors anymore. Even though seniors actually vote.
All government programs should ve “means tested”. Every single one of them.
Provincial and federal.
That would have been any easy solution for this issue.
Ten dollar a day daycare; married teachers in Campbell River. Household income over two hundred thousand, (both with masters degrees). Ridiculous as this!
Want names, I will happily provide them.
As a senior retired for 10 years with no union or government pension other than CPP and OAS this tax deferral program has been a godsend. People may not know that seniors still pay utilities and garbage fees to the municipality. In my case, and I am sure many others, the tax deferred is not invested to make money. I use it to help with monthly expenses such as the mortgage (not all seniors are mortgage free), strata fees, insurance, car expenses, groceries, medical expenses and more. I know there are seniors who don’t need the financial assistance who take advantage of the tax deferral program just because it is available but for some of us it makes a real difference in our daily lives. I hope the government will reconsider an income based system rather than instituting these changes across the board. I will be writing to my MLA and I encourage others to do so as well.
NDP are not fit to Govern
This is a money grab by theNDP! Shame on them for taking advantage of seniors already struggling with the cost of living. Reverse the decision!!!
Well that’s really helping the seniors now isn’t! It’s hard enough to make ends meet, then when you need to sell your home to move into a home, you don’t have any money for that!!!!
How about taking care of the people that have built this province instead of those immigrating.
And here I always thought the NDP were all about protecting the people. Apparently they’re taking a page out of the liberal playbook.
Deferring property taxes at Prime minus 2% only made sense when that money could be invested at a much higher rate. Prime plus 2% gives a 4% spread.
To Larry Bell
Why should non-seniors subsidize wealthy seniors? Wealthy because they own their homes and choose monetize them (and instead expect OTHERS to give them another break)
NDP are stickong it to seniors. Absolutely criminal.
Payyourshare
Are you for f o o k i n real
@katrina Maxwell… nobody is forcing MAID on people. Are you okay??
Seems fair. Every property owner should be paying their property taxes. If they all did so, maybe the taxes would be lower! This is a huge problem for some communities and a senior that has paid off their mortgage should be getting enough in CPP and OAS to cover their taxes. If not, there are bigger problems than property tax. Thank you, NDP for closing this tax avoidance scheme that unduly burdens all property tax payers.
So seniors now who want to stay in their homes but struggle with property taxes face a 4% interest hike plus its compounded even on the interest thank you f o o k i n g NDP.
British Columbia is giving all our land to aboriginals without our consent. We push killing people with MAID. We allow the slaughter of wolves, bears the deer on the island and we now are abusing the elderly and I bet the government will mail letters to tell the elderly homeowners to be killed with MAID. British Columbia is the bloodiest killing province and doesn’t care about the elderly or handicapped or sickly people.
the bloody useless NDP screwing the seniors, cannot believe they would do this, if you think it cost to much maybe do a means text, anybody making over 100 grand a year does not get thei
Pay close attention to the word “compound”. Compounding interest is exactly how a reversed mortgage works. Mother-in-law started on of those 10 years ago, and it has grown from three hundred thousand to seven houndred and fifty thousand. The interest compounds on the debt, and that is a word ALL seniors must pay attention to
It is a good reason not to vote NDP.
Interesting story. Not sure how the numbers get up to 70% of the value of your home…”The same homeowner could now lose up to 70 per cent of their equity.” Would someone please give an actual example of these numbers? Thank you