Homeowner grant rising alongside assessments

The ink was barely dry on British Columbia’s 2018 property assessments before the province announced a three per cent increase to its homeowner grant threshold, a key property-tax break for the majority of property owners.

The B.C. Ministry of Finance on Wednesday announced it would raise the threshold to receive the full grant to $1.65 million in 2018 from $1.6 million in 2017, while property assessments climbed anywhere from one to 30 per cent, B.C. Assessment says.

The grant has sheltered older homeowners who bought homes on modest incomes decades ago and have seen their property values and subsequent property tax bills soar beyond their means.

Finance Minister Carole James wasn’t available for an interview, but in a written statement, a ministry spokesperson said the province reviews the grant threshold every year.

The 2018 homeowner grant program will cost the province $825 million, according to the ministry. The province reimburses municipalities for the grant’s full value to maintain municipal revenue.

Recently, in some corners, the grant has been criticized as a subsidy to existing homeowners that helps keep property prices elevated while new buyers struggle to get into the market.

“I’m not sure (raising the threshold) was really necessary,” considering the slowdown in appreciation for detached homes, said Tom Davidoff, director of the UBC Centre for Urban Economics and Real Estate. Davidoff said the areas that saw greater appreciation in assessed values were in suburbs where property prices fell below the new threshold.

Some detached-home neighbourhoods on Vancouver’s west side saw typical house values slide five to 10 per cent as the market for pricier houses slowed, but condominium values soared 15 to 30 per cent across Metro Vancouver.

“Generally, I think it’s a bad idea to reduce property tax burdens,” Davidoff said. “I think we should be raising property taxes and cutting other taxes.”

Davidoff was one of the economists to advocate for a provincial housing affordability fund, which would see B.C. homeowners who don’t pay income taxes in Canada pay a 1.5 per cent property surtax that targets owners of properties left vacant or those with limited economic ties to the country.

Money raised by such a tax could be used to finance local housing initiatives or other public services or to cut other taxes, Davidoff said.

However, Davidoff acknowledged the homeowner grant is a popular tax break since most voters are also property owners.

The full grant is worth $570 to homeowners under the age of 65 in the Lower Mainland and Victoria’s capital region and $770 to homeowners in northern or rural areas who own homes valued below the threshold.

For homeowners over 65, or who have a disability, grant amounts will be $845 in urban areas and $1,045 in northern or rural areas.

The goal in increasing the threshold, according to the Finance Ministry, was to make sure that it remained consistent with 2017, when 91 per cent of properties fell below the $1.65-million threshold.