Deferring Property Taxes Can Help With Cash Flow

With the higher cost of living homeowners are looking for ways to save money each month and deferring property taxes can help with cash flow.

Each province in Canada may have their own program where homeowners can apply to defer their property taxes.  The program in BC is included in the link below and includes all the criteria to qualify.

The main program allows for people over 55, a surviving spouse of any age or those with disabilities to defer their property taxes.  The additional program allows families with dependents under 18 or in some cases older child dependents who need support to defer their property taxes.

There are also some restrictions to the program and a list is provided on the website.  Those may include people with a second property, or lease land, in the instance of an estate, etc

The main program allows you to defer taxes if you have financing in place that doesn’t exceed 65% of the property value.  However, if you are a homeowner with a mortgage that is registered for a higher amount on title (ie: a collateral charge) this could block you from accessing the deferral program.  For example your home is worth $1.7M.  Your mortgage is $600K but you have registered the mortgage at the full value of the home so you can access financing in the future or a home equity line of credit.  To access the deferred tax program you would have to register the mortgage to a maximum of 65% of the value of the home (or $1,105,000 in this example).

The additional program for families allows deferral with any financing registered to a maximum of 75% of the property value.  In the example above this means the maximum registered amount for the mortgage could be $1,275,000.

There are some other things to consider once you defer your property taxes.  In the future if you need to refinance to access equity such as a home equity line of credit you would need to pay out any existing deferral of taxes. Be sure to read the details of the program before you jump in.

However, if you meet the criteria and approved, deferring property taxes can help with cash flow.  If your taxes are $6,000 per year that is $500 each month that can be used for other living costs.  Or you can use that savings for investment in your RRSP or TFSA or to pay down the mortgage and lower your cost of borrowing over time.

Before you make any decisions always consult with your independent mortgage broker, accountant and independent financial planner to ensure any change is a good one for you.