If you own a home or building in British Columbia, you will have to pay property taxes every year. You need to know about the different types of property taxes and the various due dates and tax rates so that you can ensure that you comply with the law. Here is some information about the different types of property taxes that you might have to pay in B.C.
Table of Content:
- What kind of property taxes exist in British Columbia?
- Do I have to pay tax if I own property?
- Annual property taxes and deadlines.
- Property assessments.
- Speculation and vacancy tax.
- Property transfer tax.
- The school tax and how to calculate it.
- Home owner grants.
- Can you defer tax?
- Why partnering with Ensight Cloud CPA for your property taxes and appeals is a good idea?
What kind of property taxes exist in British Columbia?
British Columbia has several types of property taxes, including the following:
- Residential property taxes in urban areas
- Residential property taxes in rural areas
- Property taxes on utilities
- Property taxes on industrial buildings
- Business property taxes
- School property taxes
- Annual property taxes
- Property transfer taxes
- Speculation and vacancy taxes
Property taxes are important because they are used to support public services, education, and other services in specific areas. These taxes provide an important revenue source for local governments to be used to support communities and areas.
Do I have to pay tax if I own property?
If you lease or own a property or a manufactured home in British Columbia, you must pay property taxes on your property every year. You are also required to pay property tax when you purchase a property or are granted an interest in a property that is located in the province.
Annual property taxes and deadlines
Property taxes must be paid each year for the property that you lease or own in British Columbia, including manufactured homes and other types of real property. Property taxes are used to fund local services, including the following:
- Fire and police services
- Emergency services
- Garbage services
- Road maintenance and construction
- Community centers
Your property tax amount will depend on the amount of money that is needed that year to provide the different services in your community, and the tax rates are set accordingly. The amount that you will have to pay will depend on your property assessment and tax rate.
The deadlines for your property taxes will depend on its location. If you live in a city or have a First Nations property, you will need to check with them to find out the various important dates. If you own rural property in British Columbia, the following dates are important for you:
- Your property assessment will be mailed to you in January.
- Jan. 31- Deadline for asking for a formal review of your assessment
- May 31- Rural property tax notices are mailed
- July 2 – Deadline for paying rural property taxes, applying for the homeowner grant, applying for a deferment of your taxes, and applying for the farm extension program
- July 3- 5% penalty will be assessed on your unpaid tax balance
- Oct. 31- Deadline to pay taxes for people in the farm extension program
- Nov. 1 5% penalty assessed on any unpaid balance; 10% will be assessed for unpaid balances of people in the farm extension program
Property assessments have a significant impact on the property taxes that people must pay. Your notice will be mailed to you in January. The assessment is used to determine the value, exemptions, and classification of your property. The value of your property is an estimated value from July 1 of the prior year. The assessor will rely on comparisons of your property to sales that have occurred in your area to estimate the value of your property. When comparing your property to others, the assessor will compare its size, shape, age, condition, use, location, and topography.
You can request a formal review of your assessment if you disagree with it. If the review does not resolve your concerns, you can appeal the decision to the Property Assessment Review Panel or PARP. Appeals are heard from Feb. 1 to March 15. When a decision is made by the PARP, it can result in a tax increase or decrease.
Speculation and vacancy tax
Because of the housing crisis in major cities, British Columbia has speculation and vacancy taxes that apply in areas in which the rents and prices of homes have become too expensive for many people. These taxes are part of the plan to try to increase the affordability of housing in major urban centres. This tax is an annual tax that is targeted to speculators who own properties in B.C. but who do not pay taxes in the province. It is meant to raise revenue through taxation to support affordable housing and to encourage owners of empty houses to turn them into affordable homes for people. All residential property owners in the areas of B.C. that are designated under the speculation and vacancy task are required to complete annual declarations. A large majority of homeowners in the province will be exempt.
You have to register your property no later than March 31 to claim the exemption. You can register your property online or by phone. Information will be mailed to you in February if you own residential property in the vacancy and speculation tax regions.
If you are not exempt, your tax rate for the speculation and vacancy tax will depend on whether you are a permanent resident or citizen of Canada and on your residency for tax purposes. The highest rate is levied on foreign property owners and people who earn most of their income outside of B.C. and pay no income tax or little income tax in the province. The tax is assessed based on property ownership on Dec. 31 of each year.
The speculation and vacancy tax is separate from the vacancy tax that the City of Vancouver assesses.
Property transfer tax
You must file a property transfer tax return and pay property transfer tax if you are granted an interest in or buy registered property at the Land Title Office. These transactions include the following types:
- Grants of life estates
- Fee simple transfers
- Property sales agreements or rights of purchase
- Lease agreements
- Quitclaim, forfeiture, or escheats
- Crown grants
The tax is based on the property’s fair market value on the date that it was registered with the Land Title Office. There are exemptions for which you might qualify, however. Taxable trustees, foreign nationals, and foreign corporations will also be assessed additional property transfer taxes for transfers of residential property in designated areas of the province. Property transfer taxes are not the same as the annual property tax that you will have to pay each year.
Property transfer taxes are assessed at the following rates:
- 1% for up to $200,000 in value
- 2% on the amount that exceeds a value of $200,000 up to $2 million
- 3% on the value above $2 million
- An additional 2% for residential property for values that exceed $3 million
You can use the government’s property transfer tax calculator to estimate the tax that you might have to pay.
The fair market value of your property is the amount that a buyer would be willing to pay to a seller for the property on the date that the property is registered. The price that you paid for a property is generally considered to be the fair market value if you register it not long after you have signed the sales contract. However, if there has been a substantial change in the property’s value or condition, you might need to confirm that the purchase price is the fair market value of your property. You will also need to do so if the property transfer did not occur in the open market.
If the transfer occurred outside of the open market, which is when any buyer can make an offer to purchase the property, you can use other methods to determine its fair market value. You can either rely on an independent appraisal or BC Assessment’s property valuation. However, since BC Assessment’s property valuation is based on the FMV of the property on July 1 of the prior year, it may not be an accurate reflection of your property’s current FMV.
The school tax and how to calculate it
Your annual property taxes include the school tax. It is not based on whether you have school-age children. The school tax is assessed on everyone who lives in B.C. because education is for the benefit of all people.
If you have a property that is located in a city, the school tax is payable to the city office. If your property is in a rural location, your school tax is payable to the Surveyor of Taxes. All properties in B.C. are charged school taxes unless they qualify for exemptions.
The residential tax rate for the school tax is set by the province each year. It is based on the number of residents in the school district and the aggregate assessed value of the homes in the district.
For non-residential properties, the school tax rate is set by B.C. each year. The school tax rate for non-residential properties falls each year because the average values within the class tend to outpace inflation. If your residential property has a high value, you might be assessed the additional school tax rate as determined by BC Assessment.
Home owner grants
Homeowner grants might be available to you. These grants reduce the property tax that you have to pay for your primary residence. Homeowner grants are available for people who pay property taxes to a city or the province. If your property taxes are payable to the First Nations, you will need to talk to them.
Homeowners that might qualify for homeowner grants include the following people:
- Disabled people
- People who live with disabled relatives or spouses
- Relatives or spouses of deceased owners
The applications for homeowner grants are subject to audits for up to seven years. This is meant to ensure that you are eligible for any grants that you receive.
Can you defer tax?
Some homeowners in B.C. may qualify for tax deferments. A deferment is a low-interest loan to help you to pay your annual property taxes on your primary residence.
When you receive your property tax notice, check the deferment programs to see if you qualify. Your property tax account should be current. You will then need to apply for the deferment program for which you qualify. Each year, you will need to renew your tax deferment agreement. Some property taxes can’t be deferred.
The yearly property tax notices are mailed in May. You have to know your current year tax amount before you submit your application for a deferment. If you have not received your notice by June 30, contact the property tax office. If you live in Vancouver, you have to wait to apply for a tax deferment program until your tax notice billing period.
You may qualify for either the regular program or the program for families with children. The regular program is available to people who are aged 55 or older, surviving spouses, or people with disabilities. The families with children program is available to people who are parents, financially support a child or are stepparents.
To qualify for a deferment, you must be current on your past-year property taxes. This means that you will need to bring your past-year property taxes current if you owe anything before you will be able to defer your taxes. You should only have current-year taxes in your property tax account.
Your application should be sent to the address on your property tax notice. If you mail it directly to the province, you will have to submit a new application. Once the property tax office receives your application, it will complete its part of the application and send it to the provincial government to be processed. The property tax office is not responsible for approving tax deferment applications.
At the time that your application is processed, your eligibility for the program will be confirmed. You might be asked to supply additional information about your eligibility. You should add email@example.com to your contacts so that your firewall protections do not send emails from the government to your spam folder.
Deferment applications can take several months to process, which means that you might not receive your response until after the due date for your property taxes. As long as your application is received before the due date and is approved, you will not be assessed a late penalty. If your application is denied, you may be assessed a late penalty on your balance.
If your application for a tax deferment is approved, the province will pay your property taxes for you. A restrictive lien will be placed on your property. This lien will limit the changes that you can make to the title while you participate in the program. The regular program comes with a $60 fee that will be added to your property tax account. You will not be assessed a fee for participating in the families with children’s tax deferment program.
You will be charged simple interest beginning from the due date of your property taxes or the date of your deferment application, whichever is later.
Finally, it is important to note that you will have to complete a renewal application each year if you want to continue to defer the taxes under the agreement. You will receive a statement of your account and a renewal application each May.
You will not be able to defer your property taxes under the following circumstances:
- You don’t meet the qualifications for the program.
- You have already paid your property taxes in full.
- You have overdue property taxes that you owe for prior years.
- The taxes are for a second home.
- Your home is not taxed as a residential improvement.
- Your home is taxed by a First Nation.
- You have a restrictive lien on your home’s title.
- You lease your home from a city or the Crown.
- You own your home as a registered owner in trust or are the executor of a will.
- Your home is on stilts or is floating and does not have a title that is registered with the Land Title Office.
You should talk to your lender before you apply for the tax deferment program to make certain that participating in the program will not violate the terms of your mortgage loan. Finally, your home might not qualify for a deferment if the title includes an option to purchase.
Why partnering with Ensight Cloud CPA for your property taxes and appeals is a good idea
Property taxes are important because they help cities and the government to provide vital services for the benefit of everyone. When you work with us, we can make certain that your property tax return is filed on time. Contact us today to schedule a consultation for help with your property taxes or other accounting and tax needs.