Property Tax Assessment Factors: Have you been wondering why your property tax is so high in these years? Well, in British Columbia property tax is calculated based off some key factors and we’ve broken it down below. There are 4 key factors in assessing your property tax and they are based on services available in your locality. The factors are as follows: Property Location This simply refers to the municipality or region your property is found in. Those that are closer to urban centers will often find higher evaluations for this factor. Property Classification Class 1 refers to Residential Property and contains single-family residences, multi-family residences, duplexes, apartments, condominiums, nursing homes, seasonal dwellings, manufactured homes, some vacant land, farm buildings and daycare facilities. Class 2 is Utilities and refers to structures and land used for railway transportation, pipelines, electrical generation or transmission utilities, or telecommunications transmitters. Class 3 would be Supportive Housing and is only applicable for eligible supportive housing property that has been stated by the Cabinet. These support people who were previously homeless, at risk of homelessness and those affected by mental illness or are recovering from drug or alcohol addictions and have obstacles towards housing. Class 4 involves Major Industry which would be land and improvements of industrial plants and includes lumber and pulp mills, mines, smelters, large manufacturing plants, ship building and loading terminals for sea-faring ships. Class 5 is Light Industry and these properties are used for extracting, processing, manufacturing or transporting products including scrap metal yards, wineries and boat-building facilities. Class 6 is Business Other but basically refers to offices, retail, warehousing, hotels and motels. Class 7 refers to Managed Forst Land and is simply privately-owned forest land that is managed according to regulation. Class 8 properties are Recreational Properties and NPO’s which is broken down as the following: Recreational Land includes outdoor recreational facilities or land that is used for overnight commercial accomodation to facilitate outdoor recreational activities. Non-Profit Organization Land and Improvements require that the land is a place of public worship or as a meeting hall for at least 150 days per year. Class 9 would be a Farm and to qualify, the land must produce a specific amount of qualifying agricultural products for sale like crops and livestock. Keep in mind, properties with multiple distinct uses can be classified as more than one class. Property Assessed Value The Value of the Land The Value of the Buildings or Structures The number of Lots on the Property The Size of the Property The Length of Land that Fronts a Public Work Cost of Services Simply, this refers to the services offered to your property and can include services for schools or waste management. Property Taxes: The BC Home Owner Grant Regular Grant: The amount is $570 and applies to properties found in the Capital Regional District, the Metro Vancouver Regional District and the Fraser Valley Regional District. All other areas in BC get $770. You must pay at least $350 in property taxes regardless. Additional Grant: If you fall into one of these categories, you may qualitfy for an additional grant so make sure to let your accountant know. Seniors Veterans Person with a Disability Living with a Spouse or Relative with a Disability Spouse or Relative of a Deceased Owner For more information, give us a shout or check out the following pages: The British Columbia Government Website on Property Tax Notices The British Columbia Government Website on Home Owner Grants The BC Assessment Website on Property Classes and Exemptions
Author Archives: Advanced Tax
Rental Income: Deductible Expenses Have you received government COVID-19 assistance for rental income or expenses such as the CEWS (Canada Emergency Wage Subsidy)? Make sure to include the amounts in your rental income or expenses. We’ve also broken down the list of deductible expenses that you can claim against your rental income so keep reading to find out more. Expenses You Can Deduct from Your Rental Income Prepaid Expenses Expenses paid ahead of time such as insurance. You may use the accrual method or the cash method. Advertising Costs For example, advertising your rental property on paid media networks or finder’s fees are all deductible. Insurance Expenses Premiums paid on the rental property for the current year may be deducted from your income. Interest and Bank Charges Interest charged on money borrowed to improve or buy rental properties may be claimed as well as interest charges paid to tenants on rental deposits. Office Expenses This includes small items like pens, pencils, paper clips, stationary and stamps but does not include capital expenditures such as cabinets, office chairs or desks. Professional Fees These fees include legal costs such as legal services to prepare leases or collection costs for overdue rent. For accounting fees, this would include bookkeeping services or even the cost of preparing your income tax return by an accountant. Management and Administration Fees If you pay for a person or company to manage the rental property or to agents to collect rents or even to find tenants, you may claim these under this category. Repairs and Maintenance Costs Costs of labour and materials for minor repairs or maintenance are deductable excluding your own labour and capital costs. Salaries, Wages & Benefits Amounts paid to superintendents, maintenance personnel and others employed to take care of the rental property can be deducted but not the value of your own services. Property Taxes This is only deductible for the period that the property was available to rent. For example if the property was only available to be rented for half the year, that proportion of the property taxes is deductible. Travel Expenses Travel expenses incurred to collect rent, supervise repairs and managing properties are all deductible. Utility Costs You can deduct the expenses for utilities if the rental arrangement specifies that you will be paying for the utilities of the rental space. Motor Vehicle Expenses If you own one rental property, you can only deduct reasonable motor vehicle expenses if you: Receive income from only one rental property that is in the general are in which you live. You personally do all or part of the necessary repairs and maintenance on the property. You have motor vehicle expenses to transport tools and materials to the property. You can’t deduct motor vehicle expenses incurred to collect rent as they are personal expenses. If you own two or more rental properties, here’s your criteria to deduct motor vehicle expenses. If you use your motor vehicle and incur reasonable expenses to collect rent, supervise repairs or manage the properties, you may deduct your expenses. Your rental properties have to be located in at least two different sites and away from your principal residence. Other Expenses Rental Income: Non-Deductible Expenses Landscaping Costs Landscaping the grounds around the rental property is only applicable in the year you paid the cost regardless of whether you use the accrual of cash method of calculation. Lease Cancellation Payments Amounts paid or payable to tenants to cancel their leases are deductible. Condominium Fees Not only can you deduct the normal fees for a rental unit but also condominium fees that come from your share of the upkeep, repairs, maintenance and other current expenses. Vacant Land Rental income from vacant land can have the operating expenses deducted as well as interest and property taxes. The limit for the deductions of the interest and property tax is the amount of rental income left after deducting all other expenses but you can’t create or increase a rental loss via interest or taxes. You also can’t deduct mortgage interest, property taxes, income taxes, profit taxes or land transfer taxes if there is no earned income from the land. There are certain expenses that cannot be deducted and are listed here: Land Transfer Taxes Instead, add these amounts to the cost of the property. Mortgage Principals You cannot deduct repayments of principle on your mortgage or loan. Penalties Any penalties from your Notice of Assesment/Re-Assesment can’t be deducted. Value of Your Own Labor Find out more via the Canadian Government’s section on the taxation of rental income by clicking here or at the link below.
Automobile Deductions in 2022: On December 23, 2021 – the Department of Finance Canada announced some changes to the automobile income tax deduction limits as well as expense benefit rates that apply in 2022. Here’s a breakdown of the changes to limits and rates which were effective as of January 1, 2022: The Capital Cost Allowances (CCA) ceiling for zero-emission* passenger vehicles has increased from $55,000 to $59,000 before tax. The CCA ceiling for passenger vehicles in general has increased from $30,000 to $34,000 before tax. For both CCA ceiling changes, vehicles new or used must be acquired on or after January 1, 2022. New deductible leasing costs are now increased from $800 per month to $900 per month before tax for new leases. Limits on deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes in provinces has increased by $0.02. This brings it to $0.61 per km in the first 5,000 km and each additional km receives a deduction of $0.55. If you are in the territories the limit is increased by $0.02 as well but has increased to $0.65 for the first 5,000 km and $0.59 for all additional km driven. There was also an increase by $0.02 in the general prescribed rate for the taxable benefit of employees in regards to their personal portion of automobile expenses paid by employers, bringing it to $0.29 per km. *Keep in mind that for a zero-emission passenger vehicle to be eligible, it can be a plug-in hybrid with a battery capacity of at least 7 kWh, are fully electric or fully powered by hydrogen. Have any questions? Give us a call at (604) 227-1120 to find out more, email us at info@advancedtax.ca or visit Canada.ca.
Did you know that you may be eligible for the GST/HST New Housing Rebate offered by the Canadian government? This allows you to recover some of the GST or the federal portion of the HST paid for the house or renovation as long as it’s a primary place of residence. Corporations or partnerships are not eligible for this rebate. Eligibility Conditions: Purchased a new or substantially renovated house from a builder including housing on leased land for use as your primary place of residence. If it’s a lease, then the term must be for at least 20 years or has the option to buy the land. Purchased shares in a co-op in order to use a unit in a new or substantially renovated cooperative housing complex as your primary place of residence. Keep in mind that substantially renovated refers to having at least 90% of the interior of the house being removed or renovated. Constructed or substantially renovated your own home for use as your primary place of residence as long as the fair market value of the house is less than $450,000 when the construction is substantially completed. Houses Purchased from a Builder: Purchasing a new or substantially renovated house including the land from a builder. Purchasing a new or substantially renovated mobile or floating home from a builder, manufacturer or vendor. Purchasing a share of the capital stock of a cooperative housing corporation where the co-op paid tax on a house or renovated house. Purchasing a new or renovated house from a builder that you lease the land from in which you may buy the house and/or is longer than 20 years. Built the house or hired someone else to do so? As long as you meet one of the following requirements, you are also eligible for the rebate. Owner-Built Houses: Building a house on land that you own or lease. Renovating your existing house by at least 90% of the interior. Developing a major addition to your house that doubles the living space. Converting a commercial building you own into your house. Purchasing a new or substantially renovated mobile/floating home. Have any questions? Give us a call at (604) 227-1120 to find out more, email us at info@advancedtax.ca or visit the Government of Canada‘s website to learn more.
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