Hello everyone, this is Paul Choi from the Juris Notary office. Given that it is a property tax season, I would like to talk about the Municipal property tax and Home Owner Grants (HOG) that may be available for the home owners. It will be broken down to 2 parts, with the first part discussing the basic HOG and the second part talking about the senior HOG and related strategies to reduce your property tax.
What is property tax?
Before we get into the HOG, we will quickly discuss the property tax and how they are calculated. As most people are aware, property taxes must be paid yearly for each property in BC. The money raised from the property taxes is used to fund municipal programs and services such as police and fire, road construction and maintenance, garbage collection, recreation and community centres, parks, libraries, school and hospitals.
For this reason, some cities have to rely more on the revenue from the property tax than other cities, as they may not have any other source of revenue to fund the city’s expanses. This is why some clients are surprised when they receive a property tax in Maple Ridge and is equally or more costly than Vancouver.
The City of Vancouver may have more avenues to generate revenue for the city, such as businesses and special events, whereas Maple Ridge may not have as many options, thus may have to collect higher rate of property tax to fund the city’s operating cost.
Notwitstanding, the amount of property tax you pay isn’t solely based on your property’s assessed value. In fact, there are 4 factors that will determine your property tax:
- Property location
- Property classification
- Property assessed value
- Cost of services
BC Assessment
Your annual property assessed value is determined by a provincial government branch called BC Assessment. BC Assessment will estimate the value of your properties as of July 1st of each year and make the assessment public the following year on their website.
Once the updated valuation of your property is posted at the beginning of the year, most cities will begin the process of determining how much budget they will require for the next 3 month, by end of March. The city officials will meet with head of service provider from police, fire, libraries, hospitals and schools, just to name a few, and determine what the required budget will be for the year. Once those meetings are done, they take next 2 month to decide on what tax rate will be, known as a mill rate. Each cities will look at the updated assessed property value and the required budget to operate the city and come up with the mill rate that will cover those city cost for the year. Then they will issue the tax notice to the home owners on late May or early June of each year. Most cities require the property tax to be paid by beginning of July every year.
Because the tax notice gets issued and paid in the middle of the year, some clients get an impression that the property taxes cover from July to the next year July; however, this is not the case, as the property taxes cover that calendar year from January 1 to December 31; it just happens to be due in the middle of the year due to the timing of the assessed value release date and each cities requiring time to calculate the budget they need for the year.
Appeal the BC Assessment valuation
Now that we know how property taxes are calculated, let’s look at ways to reduce your property tax.
First, when you receive your property valuation notice from the BC Assessment for the year, you can appeal the value within a specified time. The notice will give a deadline for submitting appeal and where to submit your appeal before the deadline.
You may be granted a reduction in the value and of course this will ultimately make your property tax lower.
Basic Home Owner Grant
More common option is for qualifying homeowners to apply for a Home Owner Grant. The HOG reduces the amount of property tax you pay for your principal residence only and is not applicable to any other properties. Also, you can only have one principal residence at a time so you can only claim the HOG on one property a year.
Principal residence definition
Your principal residence is the usual place that you make your home. It’s where you live and conduct your daily affairs, like paying bills and receiving mail, and it’s generally the residence used in your government records for things like your income tax, medical services plan, driver’s licence and vehicle registration.
You may qualify as a homeowner if you are:
- Under 65 years of age (Regular grant)
- A senior (senior grant)
- A veteran
- A person with disabilities
- Living with a spouse or relative with disabilities
- A spouse or relative of a deceased owner
Given that the basic grant and the senior grant are the 2 most commonly qualified grants for the public, I will only discuss these two. If you would like information on other grants, please visit this website.
Regular Home Owner Grant
The regular grant (also called the basic grant) amount for people under the age of 65 is $570 in the Capital Regional District, Greater Vancouver Regional District and the Fraser Valley Regional District. For all other areas of the province the amount is $770.
Owner’s requirement
To qualify for the grant:
- You must
- Be the registered owner of the residence
- Be a Canadian citizen or permanent resident of Canada
- Live in B.C.
- Occupy the residence as your principal residence
- The assessed or partitioned value of your property must not exceed the grant threshold
Buying or Selling Your Property
Ensure you meet additional requirements if you are buying or selling your property
If you are buying or selling a property, there are other factors that will determine the amount that you can claim for the home owner grant.
If you purchased your property during the current tax year, you may be eligible for the home owner grant if you meet the following requirements:
- The previous owner didn’t pay all of the property taxes
- The previous owner didn’t claim the grant
- You didn’t receive a grant this year for another home
- You’re occupying the property when you apply for the grant
The home owner grant that you’re eligible to claim will be applied against only the property taxes that the previous owner didn’t pay. Contact the office that issued the property tax notice for more information on how much you can claim for your grant.
You must occupy your principal residence when you apply for the home owner grant. However, if you meet certain requirements you may still be able to apply for the grant if you:
- Work outside the province
- Are absent for reasons such as medical, travel, education or home renovations
- Moved into a residential care facility
- Moved out of your principal residence because it was damaged
Grant Threshold
The grant threshold is the maximum value of an assessed or partitioned property where home owners are eligible to claim the home owner grant. The threshold amount is reviewed every year to ensure that the value of at least 91% of homes in B.C. is eligible for the grant.
The current grant threshold is $1,650,000. You may be able to claim the full grant amount if your property has an assessed or partitioned value of $1,650,000 or less.
If you meet all requirements but your property’s assessed or partitioned value is over $1,650,000, you may qualify for the grant at a reduced amount.
The grant is reduced by $5 for each $1,000 of assessed value over $1,650,000. This means the grant isn’t available for properties assessed over $1,764,000 ($1,804,000 in a northern and rural area).
Like other provincial taxes, the Property Taxation Branch seems like they are requiring more documentations or evidence to confirm your eligibility of any exemption that you received. Given that the potential consequences can result in a significant legal risks, it is crucial that you confirm the exemption requirements directly from the official BC government website or from a qualified professional.
If you have further questions, please do not hesitate to contact our office and speak to myself or any of my friendly staff.
- This is for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind.
