Understanding Changes to the BC Property Tax Deferment Program

The Government of British Columbia’s 2026 budget introduces major changes to how seniors can defer property taxes which will reshape long-term financial planning for many older homeowners and their families.

In BC, there are two key forms of property tax relief for seniors: the Home Owner Grant and the Property Tax Deferment Program.

The Home Owner Grant remains in place. Seniors aged 65 and older can continue to claim a higher grant amount than younger homeowners, reducing the property taxes owed on their principal residence. Lower-income seniors may also qualify for an additional supplement. This part of the system has not been eliminated, and it continues to provide meaningful annual relief.

The Property Tax Deferment Program has changed.

Under the previous system, eligible seniors could defer their annual property taxes through what was essentially a low-interest loan from the province. Instead of paying property taxes immediately, homeowners could postpone payment until they sold their home or their estate settled. The program was widely used by seniors living on fixed incomes who were “house rich but cash poor.”

Under the old rules, the interest rate charged on deferred taxes was set at prime minus two percent, and the interest was simple — not compounded. That meant interest accumulated only on the original deferred amount, not on previously accrued interest. Over time, this kept costs predictable and manageable.

The 2026 budget changes that structure.

Beginning with taxes deferred for the 2026 taxation year and onward, the interest rate shifts to prime plus two percent. In addition, interest will now compound. That means interest is charged not only on the original deferred taxes but also on accumulated interest from prior years.

This difference has real financial implications for seniors on the program.

Under the new rules, the total amount owed can grow much faster over time. For seniors who defer taxes for many years, the compounded interest could significantly reduce the equity remaining in their homes. For families counting on home equity as part of an estate plan, this change may alter expectations about inheritance or long-term care funding.
It’s important to note that the deferment program has not been eliminated. Seniors can still apply if they meet eligibility requirements. However, the cost of using the program will be higher moving forward.

What should seniors and families do?

First, review whether the Home Owner Grant has been fully claimed each year. Many homeowners forget to apply or assume it happens automatically. It does not.

Second, if considering tax deferment, run the numbers carefully. Compare the new deferment interest rate with other options, such as a line of credit or downsizing. In some cases, alternative financing may now be more competitive.

Finally, families should have open conversations. Adult children and aging parents may want to revisit estate plans and long-term housing strategies considering the new rules.

For many British Columbians, staying in their home is a financial and emotional priority. These budget changes do not remove support — but they do make borrowing against home equity through tax deferment more expensive. Understanding the new structure is the first step toward making informed, confident decisions.