Understanding Property Equity

Equity is the percentage of property value remaining after all charges registered against your property and current year taxes have been deducted from the current assessed value.

When you apply to defer your property taxes, you must ensure you have enough equity in your home. Each tax deferment program has its own minimum equity requirement:

 Deferment Program Minimum Equity Regular 25% Families with Children 15%

If you already defer your property taxes and plan to defer your taxes in future years, you must maintain the minimum equity in your property.

How we verify the equity in your home

We use the following information to determine how much equity you have in your home:

If we don’t have enough information to verify your home’s equity, we'll send you a letter requesting information from your financial institution by a given due date.

Example calculation

Here's how equity is calculated in the following situation:

• The current BC assessment value of your home is \$500,000 (includes land and improvements)
• Your current year’s taxes are \$2,500 (after the home owner grant has been deducted)
• You have an outstanding mortgage balance of \$300,000 (you can find this amount on your mortgage statement)
• You have a line of credit registered against your property with a credit limit of \$10,000 (use the credit limit amount, not the amount you have used)

To calculate the equity:

1. Subtract the current year taxes and each registered charge from the assessment value of your home (\$500,000 – \$2,500 - \$300,000 – \$10,000 = \$187,500)
2. Divide this amount by the total assessed value and multiply it by 100 (\$187,500/\$500,000 =.375 x 100 = 37.5%)

In this example, you would have 37.5% equity in your home and you would meet the minimum equity requirements for either one of the tax deferment programs.

Assessed Property Value

The assessed value of your property is determined by BC Assessment. You'll find the assessed value of your property on the property assessment notice that was mailed to you in January by BC Assessment. This statement shows you the value of both land and improvements. Improvements are any buildings on your land, such as your home.

Other appraised values are not accepted.

If your property is held partially in trust or an executor state, equity is based on the percentage of the property value held in fee simple.

Fire Insurance

For the purpose of calculating equity, your property value is based on the assessed value of both land and improvements. However, if you don’t have fire insurance on your improvements, your property value is based on the land value only.

Registered Charges

You may have charges with a dollar value registered against your property at the Land Title Office or the Personal Property Registry (if you own a manufactured home).

Here's a list of some charges that you may have registered against your property and how you can find out their value:

• Your mortgage(s): refer to your latest mortgage statement to find out the outstanding balance. Use that balance as the value of the charge.
• Line(s) of credit: refer to your latest line of credit statement to find the overall credit limit. Use that credit limit as the value of the charge.
• Combined mortgage(s)/line(s) of credit: refer to your latest mortgage statement to find the overall credit limit. Use that credit limit as the value of the charge.
• Outstanding property taxes previously deferred under your principal residence: refer to your annual statement of account

The amount owed when the charge was registered may not be accurate today. We'll request the current information, if necessary.

If you have an inter-alia mortgage (meaning your mortgage is secured by more than one property) we'll use the total registered value across all properties in our equity calculation on the single property you're applying on.

Charges registered under the Family Law Act or Family Maintenance Enforcement Act will be reviewed on an individual basis.

All charges registered against your property plus the amount of taxes you want to defer can’t leave you holding less than the minimum equity for the deferment program.