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My favourite bugbear: deferred property tax for seniors. I've always thought that age was a fascinating element in these programs. Why not just have programs f

My favourite bugbear: deferred property tax for seniors. I've always thought that age was a fascinating element in these programs. Why not just have programs for low-income people, full stop -- why make it low-income seniors? And then the logical followup: how are you financially vulnerable if you have an asset worth hundreds of thousands of dollars? Some jurisdictions in Canada do these programs better than others. My hometown of Kitchener, Ontario requires that you be receiving the federal guaranteed income suppement (given to all retired folk below a certain income threshold) before they let you defer your property taxes. The province of British Columbia will defer property taxes for anyone over age 55. If I lived in BC, I would certainly choose to defer property tax, with interest assessed at 1%/year, and invest the deferred tax in the market. In fact, I might invest the difference in BC bonds -- which pay 3.4%/year. What a sham for the taxpayer.

cauterized 12y ago
They do this because seniors are typically on a fixed retirement income and often aren't even capable of working to increase it (which is why social security exists in the first place). They are financially vulnerable if they own a home but the taxes on it exceed what they can afford on that fixed income, which can easily happen when property values increase, when property taxes increase, or when inflation makes the fixed income cover less of their other expenses. The deferred taxes make sense because the seniors can then stay in their home instead of uprooting their lives and possibly spending even more on rent, and the govt gets their taxes eventually anyway.
- cldellow 12y ago
  Most seniors are on a fixed income -- the ones on GIS, certainly. It's not clear to me why anyone over age 55 should be eligible, when the retirement age in Canada is 67. The government is effectively paying them to live in their house, no? They're charging 1% interest but raising money in the bond market at 3.4%. Presumably if they were actually collecting the property tax, they would have less of a shortfall to cover in the bond market.
  - cratermoon 12y ago
    > how are you financially vulnerable if you have an asset worth hundreds of thousands of dollars? For most people, the house they own is not an asset, it's their home. Taking out home equity loan is very unwise financially, and selling it, while it will generate a fixed sum, is not only complex but can introduce additional taxes. In addition all that, the former homeowner must now find a new (rented) residence and move, and live for who knows how long on the proceeds from the home sale.
    - cldellow 12y ago
      > selling it [..] can introduce additional taxes Hmm, can you provide an example? The deferment programs are only available on one's principal residence. Sale of principal residences are exempt from capital gains in Canada. > it's _their home_ I get that it's your home and it would be sad to sell it. It would be sad to sell it when you're 30, too. But let's say we rationalize it as being OK to evict a 30-year-old, but not OK to evict a 55-year-old. I still have issue with the fact that: * there's not a means test * the interest charged doesn't match market interest, so when you finally die and your estate settles up with the government, you've paid less tax than the fellow down the road due to interest rate arbitrage I can't find usage stats on BC's tax deferment program, which is a shame as theirs seems the most open to abuse. e.g. this CFP [1] recommends that anyone who can (i.e. is over 55) take advantage of it, regardless of financial need. Which makes sense: it is one of the few ways in Canada to transfer your personal tax burden onto others. [1]: http://business.financialpost.com/2011/05/31/property-taxes-defer-them/ http://business.financialpost.com/2011/05/31/property-taxes-...
      - bsdshepherd 12y ago
        You seem genuinely open to discussion. UI issues prevent offering all I'd like, but I suggest you add sociology - particularly the family unit and successive generations - with your economic views. The arguments on this post lack enough dimensions to be of any use other than generating conflict. Eviction based solely on age is a fruitless direction to move in. A (35/50) y.o. with a 4 bedroom house is not comparable to a 4 bedroom house, owned by two (35/50) y.o. people who (are raising/raised) 3 children, one of whom (birthed/returned home with) a child. There are many other dimensions to consider, but I am unable and unwilling to continue.
- pouetpouet 12y ago
  There is a thing called https://en.wikipedia.org/wiki/Reverse_mortgage https://en.wikipedia.org/wiki/Reverse_mortgage that can help old owners go on with their life without losing their shelter.
sliverstorm 12y ago
how are you financially vulnerable if you have an asset worth hundreds of thousands of dollars? Easy. Yes you have a hard asset, but you have largely spent the most valuable assets you have- your strong back, free time, and good health. The 21-year-old might be pennyless, but his assets are worth quite a bit more than $100k in cash, and they keep pace with inflation...
- Dylan16807 12y ago
  You listed health twice, and what kind of unemployed and not-looking-for-a-job (if we're talking about fixed retirement income) person has no free time?
  - sliverstorm 12y ago
    The ability to do work (strong back) and the freedom from onerous medical expenses (good health) are related, you are right. But I like to think of them as distinct, because you can have one without the other. As for free time, I am not saying a retiree has no time. Just, much less left to work with.
- JamesBarney 12y ago
  If his assets keep pace with inflation then how does he end up needing assistance when he's 55? I'm all for government being involved in retirement because shit happens. hould the upper middle class person in a 600k house be given more then his brother who rents? If we have government funded retirement(which I'm all for) why should some of it be dependent and proportional to the amount of house one owns.
  - jacquesm 12y ago
    > If his assets keep pace with inflation then how does he end up needing assistance when he's 55? Usually by over-spending during the times when it seems as if income will never end.
- bsdshepherd 12y ago
  Your comment is excellent. Depreciation is never addressed in these discussions. Asset, as most terms, depends on context. "The youth of today do not know what to believe, but are willing to fight for it anyway." - Abraham Lincoln

cauterized 12y ago

They do this because seniors are typically on a fixed retirement income and often aren't even capable of working to increase it (which is why social security exists in the first place). They are financially vulnerable if they own a home but the taxes on it exceed what they can afford on that fixed income, which can easily happen when property values increase, when property taxes increase, or when inflation makes the fixed income cover less of their other expenses. The deferred taxes make sense because the seniors can then stay in their home instead of uprooting their lives and possibly spending even more on rent, and the govt gets their taxes eventually anyway.

cldellow 12y ago
Most seniors are on a fixed income -- the ones on GIS, certainly. It's not clear to me why anyone over age 55 should be eligible, when the retirement age in Canada is 67. The government is effectively paying them to live in their house, no? They're charging 1% interest but raising money in the bond market at 3.4%. Presumably if they were actually collecting the property tax, they would have less of a shortfall to cover in the bond market.
- cratermoon 12y ago
  > how are you financially vulnerable if you have an asset worth hundreds of thousands of dollars? For most people, the house they own is not an asset, it's their home. Taking out home equity loan is very unwise financially, and selling it, while it will generate a fixed sum, is not only complex but can introduce additional taxes. In addition all that, the former homeowner must now find a new (rented) residence and move, and live for who knows how long on the proceeds from the home sale.
  - cldellow 12y ago
    > selling it [..] can introduce additional taxes Hmm, can you provide an example? The deferment programs are only available on one's principal residence. Sale of principal residences are exempt from capital gains in Canada. > it's _their home_ I get that it's your home and it would be sad to sell it. It would be sad to sell it when you're 30, too. But let's say we rationalize it as being OK to evict a 30-year-old, but not OK to evict a 55-year-old. I still have issue with the fact that: * there's not a means test * the interest charged doesn't match market interest, so when you finally die and your estate settles up with the government, you've paid less tax than the fellow down the road due to interest rate arbitrage I can't find usage stats on BC's tax deferment program, which is a shame as theirs seems the most open to abuse. e.g. this CFP [1] recommends that anyone who can (i.e. is over 55) take advantage of it, regardless of financial need. Which makes sense: it is one of the few ways in Canada to transfer your personal tax burden onto others. [1]: http://business.financialpost.com/2011/05/31/property-taxes-defer-them/ http://business.financialpost.com/2011/05/31/property-taxes-...
    - bsdshepherd 12y ago
      You seem genuinely open to discussion. UI issues prevent offering all I'd like, but I suggest you add sociology - particularly the family unit and successive generations - with your economic views. The arguments on this post lack enough dimensions to be of any use other than generating conflict. Eviction based solely on age is a fruitless direction to move in. A (35/50) y.o. with a 4 bedroom house is not comparable to a 4 bedroom house, owned by two (35/50) y.o. people who (are raising/raised) 3 children, one of whom (birthed/returned home with) a child. There are many other dimensions to consider, but I am unable and unwilling to continue.
pouetpouet 12y ago
There is a thing called https://en.wikipedia.org/wiki/Reverse_mortgage https://en.wikipedia.org/wiki/Reverse_mortgage that can help old owners go on with their life without losing their shelter.

sliverstorm 12y ago

how are you financially vulnerable if you have an asset worth hundreds of thousands of dollars? Easy. Yes you have a hard asset, but you have largely spent the most valuable assets you have- your strong back, free time, and good health. The 21-year-old might be pennyless, but his assets are worth quite a bit more than $100k in cash, and they keep pace with inflation...

Dylan16807 12y ago
You listed health twice, and what kind of unemployed and not-looking-for-a-job (if we're talking about fixed retirement income) person has no free time?
- sliverstorm 12y ago
  The ability to do work (strong back) and the freedom from onerous medical expenses (good health) are related, you are right. But I like to think of them as distinct, because you can have one without the other. As for free time, I am not saying a retiree has no time. Just, much less left to work with.
JamesBarney 12y ago
If his assets keep pace with inflation then how does he end up needing assistance when he's 55? I'm all for government being involved in retirement because shit happens. hould the upper middle class person in a 600k house be given more then his brother who rents? If we have government funded retirement(which I'm all for) why should some of it be dependent and proportional to the amount of house one owns.
- jacquesm 12y ago
  > If his assets keep pace with inflation then how does he end up needing assistance when he's 55? Usually by over-spending during the times when it seems as if income will never end.
bsdshepherd 12y ago
Your comment is excellent. Depreciation is never addressed in these discussions. Asset, as most terms, depends on context. "The youth of today do not know what to believe, but are willing to fight for it anyway." - Abraham Lincoln