Homeowners to spend more on property tax in 2024 after 3 years of relief
Prince Edward Island homeowners will be seeing an increase on the provincial part of their tax bills for 2024 — but it won't be as big an increase as it might have been.
Ryan Pineau, the province's tax commissioner, says the province provided subsidies to offset provincial tax increases on owner-occupied properties in 2022 and 2023, when inflation was soaring.
(That apparent freeze applied only to the provincial tax portion of homeowner's tax bill; people may still have seen an increase in the municipal portions of their tax bill.)
Instead of people paying more than 5 per cent extra for those years, the subsidies kept what homeowners paid in the provincial portion of their property tax the same as it had been in 2020.
Now, the province has announced a new tax credit that will reduce what might have been a significant increase in Islanders' tax bill for 2024.
"The tax credit, the way it's going to function is it's going to assume that the tax assessed value at Dec. 31, 2023, is the same as it was at Dec. 31, 2020," Pineau said.
"So rolling into 2024, you've got a value based on 2020, but the 2024 increase will still occur. And that 2024 increase is based on CPI [Consumer Price Index, a measure of inflation] in 2023."
What people were paying on the provincial portion of their tax bill didn't change over those three years, but assessments did continue to increase.
As an example, Pineau points to a hypothetical property assessed at $150,000 in 2020. By 2024, assuming a 3 per cent inflation rate in 2023, that assessment will be $170,336. For the years 2020 through 2023, the provincial portion of the homeowner's tax bill would have stayed at $1,500. But in 2024 it would be $1,545.
Pineau said the tax credit will be adjusted if renovations were done to a home during that period, or for a home that was bought between Dec. 31, 2020, and Dec. 31, 2023.
The formula to keep that assessment growth from 2020 to 2023 from affecting the amount of taxes payable will be set into provincial regulations, so the increase won't surface down the road.
A new credit for multi-unit rental properties was also introduced. Owners of rental units will pay taxes as if their rental units were assessed the same in 2023 as they were in 2022. That means 2024 may still see an increase based on market conditions, but it will be based on that 2022 starting value.
