Experts have mixed reaction over deferring property taxes
British Columbia provincial government has recently announced plans to allow families with children under 18 to defer property taxes. Some experts are concerned that this could create future debt problems for individuals who aren't careful with their money.
The idea is that deferring property taxes will allow these families with children to get into the housing market or move up the property ladder. At the moment, there is a program in place where senior citizens and low income residents to defer taxes while they live in their own home. These deferred taxes are subject to interest and must be repaid in full before the home is sold.
While this is a useful program for seniors, who are less likely to sell their homes, but may not be appropriate for young homeowners. Moreover, seniors' homes will appreciate in value more than the taxes being deferred while this isn't necessarily true for new homeowners. As house prices continue to rise, the cost of deferred taxes is easily covered when the home is sold. However, for young homeowners, the situation is different. These taxes must be paid eventually and deferring them may lead to insurmountable debt.
Under this program, the provincial government will pay the deferred taxes to municipalities so that local governments don't suffer from lost property tax revenue. Qualified families can either defer the tax until they die or sell the home, but they must be paid back and after accumulating interest at that.
While the program will not be ideal for everybody, some experts feel that the program will help ease the financial responsibility of raising children. This added flexibility could be a real life-saver for families that would benefit greatly from a few hundred extra dollars every month. Unfortunately, the interest accrued on the deferred taxes will add up so some are concerned about homeowners' ability to pay them back.
The program may be a great help to some but they need to plan their finances very carefully to avoid getting buried under a mountain of debt.
The idea is that deferring property taxes will allow these families with children to get into the housing market or move up the property ladder. At the moment, there is a program in place where senior citizens and low income residents to defer taxes while they live in their own home. These deferred taxes are subject to interest and must be repaid in full before the home is sold.
While this is a useful program for seniors, who are less likely to sell their homes, but may not be appropriate for young homeowners. Moreover, seniors' homes will appreciate in value more than the taxes being deferred while this isn't necessarily true for new homeowners. As house prices continue to rise, the cost of deferred taxes is easily covered when the home is sold. However, for young homeowners, the situation is different. These taxes must be paid eventually and deferring them may lead to insurmountable debt.
Under this program, the provincial government will pay the deferred taxes to municipalities so that local governments don't suffer from lost property tax revenue. Qualified families can either defer the tax until they die or sell the home, but they must be paid back and after accumulating interest at that.
While the program will not be ideal for everybody, some experts feel that the program will help ease the financial responsibility of raising children. This added flexibility could be a real life-saver for families that would benefit greatly from a few hundred extra dollars every month. Unfortunately, the interest accrued on the deferred taxes will add up so some are concerned about homeowners' ability to pay them back.
The program may be a great help to some but they need to plan their finances very carefully to avoid getting buried under a mountain of debt.
Labels: British Columbia Real Estate, Greater Vancouver Homes
posted by VancouverResidence
