Property tax deferral programs can vary greatly according to the area you live in.  Home owners age 55 and older in British Columbia who have at least 25% equity in their properties are able to defer their property taxes.  In order to qualify the home  owner must reapply each year.  Details on the rules are here:    http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Property_Tax_Deferment/about.htm .   The age 55+ individual qualifies, regardless of financial need.  The homeowner defers their taxes for as long as they wish or until the home is sold.  The money saved can be put to any use including home improvements or vacations.  These savings could even be a great way to fund a Tax Free Savings Account (TFSA), providing the home owner with even more ‘bang for their saved buck’.  Not only does the home owner get to keep property tax money, but they can also get it growing, sheltered from taxes.

Let’s do the math on the outstanding tax bill:

Assume for this example that the average property tax in BC in 2013 are $3,500 annually.  For a female age 55 deferring her taxes until the age of 82 when she sells the home, there will be more than $100,000 in taxes outstanding on her home (plus interest).   When she sells the home, the outstanding money will be paid to the government.  This could be a risk for an older person who is facing costs for substantial in-home care or specialized residential care.  The proceeds from the home may not be sufficient.  It could be argued that this individual was able to remain in her own home longer due to this tax deferral program.  On the other hand, the program is not exclusively for those with financial need and may be more suitable if it was triggered only when financial need arose. This approach would help to keep at-risk individuals in their homes.  Finally, the growing debt due on property taxes may have been better managed as an annual disciplined budget item rather than a large bill in the older years when people are likely to be more financially vulnerable.

Does this seem reasonable?

  1. This may be a good personal financial strategy.  After all, why not put the money to good use in your life rather than let the government have it?   However, the government uses the money to provide programs for the people.  Less income for the government would seem to mean less money available for programming.
  2. People will successfully redirect this money that they saved on property taxes and benefit the economy.  They will consume goods and this will result in more jobs, more retail sales taxes paid and so on.  But if the government is willing to defer taxes on a home then why not defer taxes on other things too so non-home-owners can enjoy redirecting money too?
  3. Should this ‘easy’ loan be available to those without a need?  In Toronto, for example, there are utility and property tax increase deferral programs for those meeting a low income cut-off http://www.toronto.ca/taxes/property_tax/tax_relief.htm.  This approach seems to fit the profile of a government program because it is available to assist those who might otherwise be making do without some medications or food.

Google “property tax deferral programs” and the area you own a principal residence in to find out about programs in your area.