B.C. government hikes school property tax, changes tax deferment rules | Daily Hive

B.C. government hikes school property tax, changes property tax deferment rules

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The Government of British Columbia is raising the School Tax on high-value homes and changing how school property tax rates are calculated, according to measures in today’s 2026 B.C. budget announcement.

Starting in 2027, homeowners with properties assessed above $3 million will pay higher additional school taxes. The tax rate on the portion of a home’s value between $3 million and $4 million will increase from 0.2 per cent to 0.3 per cent. For the portion of a home’s value above $4 million, the rate will rise from 0.4 per cent to 0.6 per cent. This amounts to a 50 per cent increase in the rates.

The extra school tax applies to most residential properties worth more than $3 million, including single-family detached houses, townhomes, and condominium homes, as well as most vacant land. For mixed-use buildings, only the residential portion above $3 million is taxed. The provincial government estimates that about 2.3 per cent of homes will be affected.

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The budget also changes how school property tax rates are set for both businesses and homeowners, starting in 2026.

Instead of tying yearly increases mainly to inflation and new construction, the provincial government will now adjust school property tax rates based on the average growth of B.C.’s economy over the past three years. The provincial government states this is meant to stop property tax revenues from falling behind the rest of the economy.

According to the budget, the share of provincial tax revenue coming from property taxes has dropped from 14 per cent in the 2003/2004 fiscal year to eight per cent in 2025/2026. The new approach is meant to keep property taxes more in line with overall economic growth.

The provincial government notes these changes, along with the higher tax on luxury homes, are part of a broader effort to modernize how schools are funded through the property tax system.

This provincial school property tax is in addition to the property taxes levied by BC Assessment, BC Municipal Finance Authority, municipal governments, and regional districts. Metro Vancouver property owners also pay a property tax to TransLink, while other areas of the province pay a property tax to BC Transit.

The combined provincial changes to the school property taxes will increase revenue by $91 million in the 2026/2027 fiscal year, $294 million in 2027/2028, and $402 million in 2028/2029. The new revenue is intended to help the B.C. government fill its immense annual deficits, which will reach a historic record $13.3 billion in 2026/2027.

In addition to the School Tax changes, the 2026 budget also amends the Property Tax Deferment Program under the Land Tax Deferment Act by increasing and harmonizing the interest rate terms for deferred property taxes. Effective for the 2026 and subsequent taxation years, the interest rates for both the regular program and the families-with-children program will be aligned and increased to prime plus two per cent, compounded monthly. The new rate will apply only to property taxes deferred for the 2026 tax year and onward. Any amounts deferred for taxation years prior to 2026 will continue to be subject to the interest rates set under the existing deferment agreements.

The provincial government states the change reflects the fact that its borrowing costs have been higher than the program’s current lending terms, effectively shifting costs to other taxpayers. By adjusting the rate, the provincial government states the deferment program’s lending terms will more closely align with commercial lending conditions.

The Property Tax Deferment Program allows eligible homeowners — including seniors, families with children, and people with disabilities — to defer paying all or part of their annual property taxes, with the provincial government placing a lien on the property that is repaid when the home is sold or the title is transferred.

Additionally, there are increases to the Speculation and Vacancy Tax (SVT) and B.C.’s Personal Income Tax. As well, the PST is being significantly expanded to cover a wider range of professional services related to architectural design, building development, and real estate transactions, specifically commissions related to buying and selling non-residential real estate.

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