For years, I have questioned the appropriateness and fairness of the BC Homeowners Grant (aka HOG). After all, it was introduced in 1957 by a Socred government that wanted to encourage residents to buy homes. Today, the provincial government doesn't need to encourage people to buy homes. If anything, it needs to help them save the down payment so they can afford to buy.
So when Katie Derosa called to ask my views on the fact that the HOG price threshold will remain around $2.1 million it seemed a good opportunity for me to share just some of my concerns about the tax. The first one is that it isn't income tested in anyway. Recipients don't even have to declare it on their income tax filing. But more importantly, the price threshold is the same for every city, town or village in the province. So while $2.1 million might be the price of an modest detached house on the west side of Vancouver, it will buy you the nicest house in many BC communities. In fact, at this price, it includes 92% of all the properties in BC!
Given that this tax costs us over $900 million, I do not think it's the best way to address housing affordability in BC. Better to spend the money on more social housing and others in great need. While not all my thoughts made it into Katie's story, she did an excellent job of reporting on my key points. Here's her story from today's Vancouver Sun.
The annual B.C. government grant that knocks a chunk off most homeowners’ property taxes unfairly gives land-rich homeowners more of a tax break than renters and should be overhauled or scrapped, some real estate analysts say.
The grant amounts for 2024 will be the same as
last year, which gives homeowners in the Capital Regional District, Fraser
Valley Regional District and Metro Vancouver up to a $570 property tax break
while homeowners outside those areas get a $770 tax break. Homeowners must use
their property as a principal residence to qualify for the grant.
Seniors, veterans or people with a disability
are eligible for a property tax savings of up to $845 in the Capital Regional
District, Fraser Valley Regional District and Metro Vancouver, or $1,045
outside those areas.
Michael Geller, a Vancouver-based developer
and real estate consultant, said he has a few problems with the “archaic”
homeowners grant, which was created in 1957 by Social Credit premier W.A.C.
Bennett.
“One is the universal price (threshold) for
the entire province, which I think is wrong,” he said. “Not having any form of
income testing, I think is wrong.”
It’s a mistake, Geller said, to have one
property value threshold for the entire province which doesn’t reflect the
varying house prices in urban centres compared to more rural parts of B.C.
So $2.1 million, that might be an average
single family house on the west side of Vancouver,” he said. “But that may well
be the most expensive house in Castlegar. So why are we giving a grant to
someone who owns the most expensive homes in many communities throughout the
province?”
Geller said it’s not fair that the $400
renters’ credit is income-tested but the homeowners grant is not. The renters’
rebate was a key B.C. NDP promise during the 2017 election, which Premier David
Eby made good on in last year’s budget.
Only renters with a household income of
$60,000 or less will get the full $400 tax credit — which critics note will
amount to $33 a month — while those who make between $60,000 and $80,000
receive a reduced amount. Finance Minister Katrine Conroy was not available for
an interview Tuesday but in a statement that 80 per cent of renting households
will get the credit, which will come this spring when they file their 2023
taxes.
“I think it’s still renters who are feeling
far greater stress than most homeowners,” said Geller, who is also an adjunct
professor of Simon Fraser University’s centre for sustainable community
development.
“People who own homes — and this might get me
into trouble — are generally better off than people who rent. That’s another
reason in my mind for questioning whether that homeowners grant is really
appropriate in this day and age,” said Geller, who doesn’t receive the
homeowners grant because his home is assessed at more than $2.1 million.
Geller predicts that in the next few years,
the program will be cancelled or “significantly refined” but it’s not something
that will happen before the October provincial election.
Conroy said there are no plans to change the
grant program to make it income tested or vary the threshold based on geography
or type of home.
“The homeowner grant provides modest property
tax relief for eligible owners,” she said in the statement. “That includes
almost half a million seniors who have seen costs rise but their income stay
the same.”
The program costs taxpayers $900 million a
year while the Finance Ministry has budgeted $307 million for the renter’s
rebate.
Andy Yan, urban planner and director of the
City Program at Simon Fraser University, agrees that the homeowners grant needs
a “rethinking” to avoid giving homeowners a better perk than renters.
“If homeowners are given this break, are
tenants given a similar break? For example, people living in Vancouver specials
renting out their basements or first floors, do they pass on the savings” to
tenants?
Yan said 40 per cent of British Columbians are
renters and don’t benefit from the homeowners’ grant.
“Maybe this conversation isn’t talking about
taking away homeowners grants, but … increasing the renters’ credit,” Yan said.
In response to written questions from
Postmedia, Conroy gave no indication the government plans to increase the
renters’ credit.
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