Can't afford B.C.'s school tax? Defer it, says finance minister

Homeowners who can't afford an upcoming tax hike on high value properties have the option to pay up later, according to Finance Minister Carole James.

Starting in 2019, an additional school tax will apply to homes valued above $3 million. Homeowners can expect to pay an additional 0.2 per cent tax on the portion assessed between $3-$4 million, and 0.4 per cent tax rate for the portions above the $4 million mark, according to the province.

The hike was introduced in B.C.'s 2018 budget and went largely unnoticed until tensions boiled over last week, when protesters forced Vancouver-Point Grey MLA David Eby to shut down a town hall on the tax increase.

Those against the hike argue that the tax hike is unfair and that many homeowners are set to see dramatic bill increases that they can't afford on a fixed income.

But according to B.C. Finance Minister Carole James, if you're expecting a bigger bill, it's likely a sign that you can afford it.

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"Anyone who will have bought in the last number of years will have needed to have those kind of dollars to be able to buy, and should be able to afford the [the tax]," James told host Stephen Quinn on CBC's The Early Edition.

For example, properties assessed at $3.5 million in Vancouver would have to pay an additional tax 0.2 per cent tax on $500,000 — or about $1,000. Over the last five years, those properties have generally risen by about $1 million in value.

"I think that's a reasonable approach," she said.

Deferring the tax bill

But the B.C. finance minister says the province is aware that some homeowners are on fixed incomes — particularly seniors who may have bought their properties decades ago before the housing boom and will now be stuck with a bigger bill.

"If you're a senior who has owned your home for a number of years, and those prices have continued to rise, you have the ability to defer your taxes," said James.

Those who qualify for the deferral can have their yearly taxes set aside and pay out the total once they decide to sell their property, according to James.

The dollars could add up significantly if your property exceeds $4 million, but James says homeowners would still come out on top.

"If you've seen a $1.23 million increase in the last five years, you've seen an increase in your value," she said.

"Even by deferring your taxes, you would see an increase that would be over and above the deferral of your taxes."

If you are interested in housing affordability, check out CBC's new podcast, SOLD! Host Stephen Quinn explores how foreign investment in real estate divides community, class and culture. Find it at CBC Podcasts or Apple Podcasts.