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Tax Relief

How does it work?

There are currently four kinds of tax relief used in Canada to encourage heritage conservation: property tax abatements; property tax credits; property tax relief, and sales tax grants and rebates.

  • Property tax abatements compensate the owner of designated heritage property for any increase in property taxes following a successful restoration or rehabilitation project. Tax abatements phase the resulting tax increase over several years.
  • Property tax credits compensate the owner of designated heritage property for the costs of a restoration or rehabilitation project. Rather than providing a grant for project costs, the municipality provides a one-time credit on property taxes.
  • Property tax relief rewards the owner of designated heritage property for designating and conserving the property by providing a fixed percentage reduction in property taxes. As long as the owner continues to conserve the heritage property, he/she can continue to apply for and receive tax relief.
  • Sales tax grants and rebates provide relief from provincial sales tax on materials and labour used for heritage conservation projects. The province of Nova Scotia is the only Canadian jurisdiction to provide this relief. It operates both a tax grant program for non-income-generating (non-taxable) heritage properties, and a tax rebate program for income-generating properties. The amount of the grant and rebate is limited to the 8% provincial sales tax.

Property tax abatements:

  • Edmonton (Alberta) – On completion of a heritage rehabilitation project or maintenance work on a designated heritage property, the city will provide a rebate to the owner for any increase in property taxes as a result of the rehabilitation or maintenance work. Payments cannot exceed 50% of rehabilitation costs or 33% of maintenance costs.
  • Cobourg, Kitchener, London, Perth and Port Hope (Ontario)– Some Ontario municipalities give tax back grants to compensate owners for any increase in property tax assessment that results from a heritage restoration project. The grant is equal to the resulting increase in property taxes. The grant is given for a limited number of years. In Cobourg, tax back grants are available to property owners in the town’s Commercial Core Heritage Conservation District. In Port Hope, the rebate would reduce the municipal portion of the property tax increase over an eight year period, up to a maximum of $10,000 per year. The reduction would be 40% in year one, 35% in year two, 30% in year three, and so on.

Property tax credits:

  • Edmonton (Alberta) – If a building is designated a municipal heritage resource and undergoes a rehabilitation or maintenance work, the city will refund the amount of the property taxes to the owner, to a limit of 50% of the costs of rehabilitation, or 33% of the costs of maintenance work. The property tax payment can continue for up to 10 years.
  • Nanaimo (British Columbia)– The city provides a tax incentive program to encourage residential conversion of heritage buildings located in certain districts. A tax exemption can be issued for up to 35% of the value of the work for façade improvement and seismic, building code and sprinkler upgrades. The exemption can then be used at any time over the next 10 years to reduce municipal property taxes. However, a review in 2004 found that property owners preferred grants to tax exemptions. By July 2006, only two of 55 heritage properties had been granted tax exemptions. http://www.nanaimo.ca/EN/main/departments/Community-Planning/heritage.html
  • Victoria (British Columbia) – Owners of designated heritage buildings in the downtown area that convert upper storeys to residential use can receive tax exemptions to offset costs for such things as seismic upgrading. The tax exemption can be applied to property taxes for up to 10 years. http://www.victoria.ca/cityhall/departments_plncmm_hrttax.shtml
  • Winnipeg and Brandon (Manitoba) – Owners of designated heritage properties can obtain a tax credit for money spent on conservation work to repair, stabilize and rehabilitate designated heritage buildings. A tax credit will be issued for up to 50% of the value of the work. The credit can then be used at any time over the next 10 years to reduce municipal property, business and amusement taxes. In Winnipeg, proposals must involve a minimum of $10,000 work; in Brandon, proposals must be for at least $5,000 work. http://winnipeg.ca/ppd/historic/historic_incentives.stm#citycreditprogram  and http://www.city.brandon.mb.ca/main.nsf/pages+by+id/410
  • Regina (Saskatchewan)– The city provides a one-time property tax credit for money spent on conservation work to restore or preserve designated heritage properties. A tax credit will be granted for 50% of the cost of eligible work, or a lump sum of $150,000 ($250,000 for downtown properties), or total property taxes payable over five years (eight for downtown properties), whichever is the least. http://www.regina.ca/Page647.aspx

Property tax relief:

  • 30 Ontario municipalities have adopted the Heritage Tax Relief Program created by the provincial government in 2006. Under the program, municipalities give the owners of municipally designated heritage properties a percentage reduction in municipal and school property taxes. Properties must be subject to a heritage easement or an equivalent conservation agreement, under which the owner agrees to carry out regular conservation work on the property to nationally accepted standards. A local Heritage Property Tax Relief Program Committee approves the applications for tax relief and conducts regular inspections of the property to monitor compliance with the easement agreement. Municipalities can choose the amount of reduction (10% to 40%), establish different categories, set a cap on the total amount of reduction, determine the interval for reapplying, and issue the relief as a rebate cheque or a tax credit. If an owner breaches the terms of the agreement, the tax exemptions must be repaid. Examples: