VANCOUVER — British Columbia residents whose homes are valued at up to $1.6 million will now be eligible for a reduction on their annual property tax bill.
The provincial government announced the change Tuesday, days after many residents were surprised by dramatic increases in the assessed values of their homes. Homes valued at over $1.2 million would lose their $570 homeowner grant.
Finance Minister Mike de Jong announced the eligibility threshold for the grant deduction from property taxes would increase by $400,000 from the 2016 limit.
The change will ensure that 91 per cent of homeowners across the province will be eligible to receive a basic grant, de Jong said, adding the program will apply to 83 per cent of the homes in Metro Vancouver.
Home sales and values have tempered in the province in recent months, but annual property assessments leaped in value. Some assessments increased by up to 50 per cent for homeowners in the Lower Mainland and on Vancouver Island.
"We are doing our part to help keep housing costs affordable for families," de Jong said in a statement.
"The strength of the province's economy and sound fiscal management have put us in a position to raise the threshold by such a large amount this year to help homeowners."
Mayors in Metro Vancouver had asked the province to consider allowing municipalities to set the eligibility threshold for the grant, in order to account for massive regional disparities in home values.
For example, the average price of a home in Vancouver is just over $1 million, while in the North Okanagan — an area encompassing Vernon, Enderby and Lumby — it is $376,969.
De Jong said during a news conference that the grant has always been administered on a provincial basis.
"This is a program that exists to the benefit of all British Columbians no matter where they live," he said.
He said the new threshold is aimed at people such as seniors who bought their home decades ago, who have seen a dramatic rise in the assessed value of their property and would suffer if they no longer qualified for the grant.
However, Tom Davidoff, a housing expert at the University of British Columbia, criticized the program, calling it a politically motivated subsidy for the wealthy.
He said it is doing more harm than good by artificially inflating real estate prices.
"You're taking the money from people who don't own homes and giving it to people who do," Davidoff said. "And when you give a gift to homeowners, you not only help homeowner with cash today, you increase the value of the homes."
He dismissed the suggestion that elderly property owners whose equity may be stuck in their homes will suffer, pointing to the province's property-tax deferral program.
"People like to give the sob story of grandma on her limited income who can't pay her property tax, but grandma is able to defer her property tax until she sells her home," he said.
Davidoff said a more effective policy would be a reduction in sales or income tax.
David Eby, housing critic for the Opposition New Democrats, said property values were calculated based on an assessment done in July, ahead of the introduction of a 15-per-cent tax on foreign buyers and before the market started to cool.
He said the government should have ensured homes were assessed again in the fall or raised the threshold for the grant sooner.
"There were a lot of calls to my office. Families were really stressed out about making their property tax payments and those families didn't have to go through that stress," he said.
"The government could have made the commitment they made today much earlier. Instead, I think this is an election-driven promise."
B.C. residents are set to cast their ballots on May 9.
The homeowner grant program is expected to cost B.C. an extra $12 million compared with last year. The province reimburses municipalities for decreased revenues resulting from the grant so local coffers are not affected by the change.
— With files from Laura Kane
Geordon Omand, The Canadian Press
Note to readers: This is a corrected story. An earlier version said the homeowner grant program will apply to one in five homes in Metro Vancouver.