Relief for those unfortunate Homeowner and property owners
Maroney on Money for July 4, 1999
There was good news out of Victoria this week – at least if you’re a leaky condo owner. On Monday the provincial government introduced a PST relief grant for leaky condo repairs and an expansion of the existing no-interest loan program. This announcement should bring some sense of relief for those unfortunate property owners who’ve been staring at blue and orange tarps for what must seem like ages.
The staring point for PST relief is July 28, 1998 which is the date the Homeowner Protection Act was passed into law.
Logically you’d think that the PST grant would be based on the actual PST paid on the repair costs incurred but that’s not the case. Presumably in the interest of reducing administration of the program, the PST grant is calculated by a formula. Having determined that approximately 40 per cent of leaky condo repairs are subject to PST, the grant is equal to 40 per cent of the total repair costs multiplied by the PST rate of 7 per cent.
True, the program is geared to leaky condominium owners, however, other housing co-operatives and single family dwellings can also qualify. Investor-owned properties are not eligible evidently because they can deduct repair costs against the rental income they receive.
Application packages will be available on July 19 at the Homeowner Protection Office and, I suspect, at their web site (www.hpo.bc.ca). Anticipating that some homeowners may be tempted to “discover” a previously unknown leak or two, all applications for the grant should be accompanied by:
• An engineer’s certificate to verify that the repair was necessary due to a “premature envelope failure” and not simply related to regular maintenance:
• A copy of the repair contract to verify the total amount of the repairs, and
• A statutory declaration by the contractor confirming repairs have been completed.
It is expected that eligible strata councils and co-operative boards will apply for the grant on behalf of individual residents within each complex. Owners of single-family dwellings will have to apply for this grant individually.
The Homeowner Protection Office also administers the Reconstruction Loan Program which was designed to provide no-interest (and possibly deferred payment) loans to eligible homeowners.
Participants will receive a T5 slip for the amount of the interest-free benefit. This amount will have to be included in each participant’s income when they file their income tax return, however, there will be no income tax payable as a result, due an offsetting deduction that can be claimed in calculating taxable income.
Eligible homeowners are those living in a leaky condo (or detached home) who do not have enough equity in their home to qualify for a standard loan to pay for the necessary repairs or who cannot afford the monthly payments on such a loan.
In addition, eligible homeowners must not have savings or investments that could be used to pay for repairs. Pension plans and RRSPs are excluded from this test – so too is the first $10,000 of net liquid assets, up from $5,000 as a result of this week' s announcement.
The press release also mentions that up to $250,000 in non-pension savings for seniors will be now be exempt. There was no such exemption for non-pension assets under the original program.
At this point, 650 soggy condo owners have taken advantage of the Reconstruction Loan Program. To date the program has approved loans totalling more than $12 million for an average loan value of approximately $18,500.
Finally, it is worth noting that both of the above programs are provincial initiatives. The federal government continues to remain silent on the leaky condo affair, evidently in the belief that those affected are a drop in the bucket.
Jim Maroney is a chartered accountant with Andrews Brown Maroney in Maple Ridge.
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