High property taxes are putting homeowners under stress
More B.C. homeowners deferring property taxes may signal distress, says appraiser
Derrick Penner
The Vancouver Sun
Rising numbers over the last five years looks like a warning sign to some, but is less worrying to others who have watched new applications slow down.
Property appraiser Paul Sullivan said he talks to a lot of homeowners who are already heavily mortgaged and don’t have the cash to cover added taxes when their property values soar “by no fault of their own.” Photo by RICHARD LAM /PNG
The number of British Columbia homeowners deferring property taxes has soared over the past five years inviting differing interpretations of what that means in the province’s overheated property markets.
To property appraiser Paul Sullivan, principal with the firm Ryan Law, the rising number suggests more homeowners are under stress due to high property taxes, particularly the province’s vacancy tax.
The number of homeowners deferring taxes hit 73,000 in 2021, according to Sullivan’s research, compared with 69,757 a year ago.
And that top number is up 76 per cent from 41,488 in 2016, with the aggregate amount those homeowners owed to the program up to $1.6 billion from $815 million over the same period.
“The frightening part is the amount, so sort of an ability pay thing by one measure,” Sullivan said, which speaks to the “house rich, cash poor” nature of Vancouver housing in particular.
However, while Sullivan looks at deferrals as a sign of financial stress in his argument that B.C.’s high-end property taxes should be rescinded, seniors advocate Isobel Mackenzie is less concerned.
Mackenzie said that while the overall number of deferrals is up, the number of new applicants to the program has declined over the last two years, 9,000 in 2020-21 and 10,670 in 2019-20 compared with 13,719 in 2017-18, the highest number in the last five years.
The debt homeowners have built up also isn’t a concern to Mackenzie because those amounts pale in comparison to the rate property values have risen and the low interest rates the program charges. She believes more homeowners should take advantage of deferral.
“So there’s $285 million that is in the hands of seniors (for 2020-21) because of property tax deferral that they otherwise would have to find in their bank accounts,” Mackenzie said.
B.C.’s property tax deferral program has been in place since 1974. Homeowners over the age of 55, surviving spouses, the disabled or families supporting children are eligible to apply, provided they meet equity requirements.
The province grants homeowners low-interest loans (the rate is 0.45 per cent for the regular program, 2.45 per cent for families with children), which is charged only on the principal, not at a compounding rate and which doesn’t have to be repaid until an owner sells their home.
Mackenzie said that the program works out to be a good financial decision for owners who can afford to pay their taxes because they can earn more by investing deferred amounts than they pay in interest.
“I’m more interested in encouraging seniors who are struggling financially — who aren’t deferring their taxes — to do so,” Mackenzie said.
And she argues the program should be expanded to cover other home-ownership costs such as strata fees and municipal utility charges.
Aside from the tax-deferrals, Sullivan said he talks to a lot of homeowners who are already heavily mortgaged and don’t have the cash to cover added taxes when their property values soar “by no fault of their own.”
Sullivan argued that the speculation and vacancy tax, launched to curb foreign speculation in B.C. real estate, is now charged to more British Columbians than foreign owners and has failed to lower property prices.
“So why don’t they rescind these taxes and get on with strategies to build homes,” Sullivan said. “That’s how we’re going to solve a housing crisis.”
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