Vacation Condos get really expensive.

You know that quarter share vacation condo you were going to buy as an investment? It looks like its going to get a whole lot more expensive. Owners are finding their property taxes doubling or tripling after they buy when the property classifications get changed from residential to business. From the Vancouver Sun article:

“Taxes on one vacation unit in a Vancouver Island resort jumped from $3,800 to $15,200 when BC Assessment changed its classification from residential to business in a shift that is hitting resort properties around the province.

At Pender Island’s Poets Cove resort in the Gulf Islands, strata fees including taxes tack on almost $1,100 a month to the cost of a quarter share in a townhouse that is listed for sale at $229,000 for 12 weeks of occupancy a year.

Some buyers are signing up for fractional ownership in vacation homes only to find long after the deal is sealed that the residential tax rate has given way to business and their costs are much higher than they expected.

The poets cove example floored me – $1,100 a month in taxes and strata fees for a place you can only stay in 4 months of the year?! Naturally there is an uproar over this classification shift:

“Developers and property owners are appealing the assessments but the regulations are against them. A group of Whistler owners, the Legends Owners Association, lost an appeal on the issue in 2005 in a decision that resonated throughout the industry.

“That Legends case at Whistler has set the tone in the property tax matter,” said Phil Leseur, vice-president corporate and legal affairs at Bear Mountain, a destination resort in Victoria.

“The judge said if it looks like a hotel, smells like a hotel, is being operated as a hotel, it’s taxed as a hotel.”

Bear Mountain was successful in appealing one year that saw taxes on its quarter-share units hiked to a business classification, but Leseur said the company is still appealing that classification for another year and there is no guarantee what will happen with upcoming tax years.”

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Anonymous
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Anonymous

The poets cove example floored me – $1,100 a month in taxes and strata fees for a place you can only stay in 4 months of the year?! Naturally there is an uproar over this classification shift:……………12 weeks = 3 months of the yearhmmm that's onerous

bcubbins
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bcubbins

"$1,100 a month in taxes and strata fees for a place you can only stay in 4 months of the year?!"Actually it's only 12 weeks a year. $1100 per week of use… good thing for double-digit price increases!!!!!! right??

Anonymous
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Anonymous

heh … funny. reminded me of something I read a long, LONG time ago(70s maybe) regarding the US IRS and some tax regulation or other. "If you look like a farmer, talk like a farmer, and especially if you SMELL like a farmer … "

bc_cele
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bc_cele

As an accountant in my former life I can't tell you how many times I warned clients that if it looks to good to be true then it probably is. CCRA is not your friend (or in this case a provincial authority) and there are too many accountants and lawyers out there that are willing to play fast and free with things.

thestreet
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thestreet

This has got to really hurt the resale market for these condos, I wonder if BC assesment is going to get aggressive with reclassifying all these types of property.