Property tax and how to deal with it

Just when you get one set of taxes all squared away for the year, it's time for another. This time it's property tax. But unlike income taxes, there is no scratching of heads figuring out what to claim. Instead, it's pretty straightforward: figure out if you are entitled to a grant, and then pay or defer.

Property taxes are based on the value of your property multiplied by the tax rate (called a mill rate in property tax). The more your property is worth, the more you have to pay.

If you think your property has been overvalued, that complaint had to be made by the end of January. So you'll have to grin and bear it this year, but keep it in mind for next year.

But you can reduce the amount of tax you have to pay if you live in the property you own through a homeowner grant. The basic grant lowers the tax by $570 just for living in the home, provided that leaves at least $350 in tax owing. Properties worth more than $1,050,000 are entitled to only a reduced grant and if the property is worth more than $1,164,000, no grant is available.

Those 65 and older or on disability or receiving a veteran's allowance are entitled to deduct another $275. But in no case can the amount of tax owing be less than $100. Again, high-end properties aren't eligible, although the limits are slightly different than for the basic grant.

Can't afford to pay the tax, even after the grants are tallied? You might be able to defer them until you've sold the property. But again, you have to live in the property. Generally, anyone 55 or older or on disability can defer paying property tax if the property has more than 25 per cent equity.

For those under 55, the B.C. government this year introduced the financial hardship property tax deferment program. Under that program, taxes for 2009 and 2010 can be deferred for those who sign a statement saying they are facing financial hardship due to the economy. In this case, the taxpayer must have at least 15 per cent equity in the home.

The deferred taxes have to be paid, with interest (currently at 1.5 per cent for the general deferment and 3.5 per cent for financial hardship) when the house is transferred to someone other than a surviving spouse or when the owner dies. And don't assume because you got a grant or a deferral last year that you don't need to reapply. Applications have to be made every year and to avoid a penalty, the applications must be made before taxes are due. This year the due date varies by municipality. For example, the deadline in Vancouver is July 3. In Victoria it's July 2.

Late tax payments -- including money you didn't have to pay because you were entitled to a grant but haven't yet applied -- are subject to penalties, which differ depending on the municipality.

Victoria, for example, charges 10 per cent on any amount not received by the end of the day July 2. The City of North Vancouver, on the other hand, will add five per cent to the tax bill on July 2, and another five per cent on balances still outstanding on Sept. 1.

The best way to pay? Without a doubt, it is paying online, said Bonnie Penny, manager of revenue services at the City of Vancouver. Vancouver and Victoria let taxpayers apply for the homeowner grant online. Rural taxpayers can too, and it's likely other municipalities allow it as well. Once the grant application is in, payments can be made online through a financial institution.

By applying for the grant and paying online, not only are you being good to the environment, you avoid having to find parking, and there is no waiting in line, Penny said. And don't wait until the last minute. Pay it now, and you can post-date the payment for the due date.

To find out what you need to know about your property tax, and how to pay it, no matter where you are, check the back of the tax notice, which provides all the information you need.

But if you still have questions, in the case of Vancouver, call first before you come in person because you will likely save yourself a trip, Penny said.

SOME USEFUL WEBSITES:

City of Vancouver: http://vancouver.ca/fs/treasury/

City of Victoria: http://www.victoria.ca/residents/billpayment_tax.shtml

Tax deferral applications: http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Property_Tax_Def erment/ptd.htm

(prepared by Fiona Anderson/Vancouver Sun)