SMALL businesses, non-profits and arts and culture organizations paying high property taxes through their commercial leases will be able to get relief through interim business property tax relief legislation that is under development, says the Province.
The legislation, to be introduced this spring, would give municipalities the ability to provide property tax relief to small businesses and organizations that they identify as paying high property taxes. These taxes are a result of the combination of years of increasing real estate values and their commercial lease terms, including triple-net leases.
“I understand people’s frustration after years of an out-of-control real estate market have left many small businesses, non-profits and arts organizations struggling with unexpectedly large tax increases,” said Selina Robinson, Minister of Municipal Affairs and Housing, on Friday. “With this interim legislation, we are giving municipalities the tools they need to provide immediate property tax relief to targeted properties, for 2020, while we continue to work with stakeholders on a permanent provincewide fix. The old government heard concerns and did nothing – we listened and got to work on solutions for people.”
Under the current assessment system, properties are valued based on “highest and best use,” which means land with a single-storey commercial building on it may be valued as if it were being used as a multi-storey residential tower. Though “highest and best use” is a standard industry appraisal principle in many jurisdictions, it can result in an increased tax burden for tenants when there is an unexpected spike in value due to factors such as zoning changes or changes to an official community plan.
The interim legislation would allow municipalities to exempt a portion of the value of a subset of commercial properties from taxation, easing the tax burden for tenants responsible for property taxes through their commercial leases.
The proposed legislation would apply to the 2020 tax year and be in effect for a maximum of five years. It is being designed to provide a way for municipalities with enough flexibility to provide tax exemptions to target specific businesses and non-profit organizations to support those most impacted by the current framework, without changing an already complex assessment system.
As this legislation is still under development, the Province will provide more information in the coming weeks.
For an overview of BC Assessment’s work, services and more, visit: https://www.bcassessment.ca/