A Vancouver housing cooperative is worried that you have to pay more than $ 1 million in taxes if you want to sign a new long -term lease contract, something that its residents simply cannot pay.
Helen’s Court is in land owned by the city in the Kitsilano neighborhood. It is home to about 100 people, living in 44 units. Residents rent the land of the city and work together to maintain a lasting community.
“It’s affordable, stable,” said David Diamond, a long -time resident. “The most important thing is that we are a town, and I think it is weird. We all know each other, and it is autonomous, so we support ourselves, we take care of each other.”
The original 40 -year -old lease for the Helen court expired last year, and they have to sign a new lease contract before June 1. But here is the trap: if they want to sign a lease contract for more than 30 years, something that cooperatives often prefer to do, will be subject to the provincial property transfer tax (PTT).
Diamond said residents were surprised to know that cooperatives are subject to said tax when they began negotiating a new lease contract with the city.
“If we have to pay the tax, all kinds of things will happen,” he told CBC’s On the coast Host Gloria Macarenko.
At this time, the rent in the cooperative increases approximately three percent per year to accumulate reserves for maintenance. To accommodate the PTT, I would have to climb at least seven percent for several years.
“We are going to make it unlawful for some of our most vulnerable members,” Diamond said.
The cooperative could sign a lease for 29 years, but at the end of the lease, there would be no guarantee that the cooperative would continue, it would depend on whether the future leaders of the city saw value in the support of cooperative homes.
“Basically we are potentially launching 30 years of existence of the cooperative for the window when trying to avoid the tax,” said Diamond.
According to the real estate lawyer Mike Walker, the PTT was introduced at the end of the 80s, originally as a luxury tax on the properties.
PTT depends on the fair market value of a property. Additional two percent are applied to Residential properties greater than $ 3 million. Only registered beneficial organizations are exempt from PTT, which housing cooperatives are not.
“That was destined to obtain single -value single -family houses, but now it is to have, I think, the pernicious effect of applying to rental buildings, housing cooperatives, non -profit buildings because their values are above $ 3 million,” Walker said.
The resident of Helen’s Court, Carla Pellegrini, said that the cooperative has been in contact with the province to find a way to exclude tax cooperatives, but so far, they have not received an answer.
“We have tried to be patients and very diplomatic, but now we are against this deadline to sign our lease, and we have to make a decision.”
On the coast12:11The non-profit cooperative co-Op wants to exempted the BC Property Transfer Tax
David Diamond and Carla Pellegrini, members of the Lease and Financing Committee of the Helen’s Co-Op cooperative, speak with host Gloria Macarenko about why they are going to public about their efforts to exempt their non-profit organization of more than $ 1 million in property transfer tax.
More cooperatives will face a similar problem
According to the city of Vancouver, there are 57 cooperatives, which contain more than 3,700 housing units, in city lands. More dozen are located throughout the province.
In a statement to CBC News, the city of Vancouver said it realizes how important are housing cooperatives when it comes to offering affordable homes. While agreed that the PPT application for cooperatives erodes its affordability, is not willing to cover that cost. However, support the lobbying of the province to change the legislation.
Walker said that many non -profit housing cooperatives and operators will be affected by PTT in the coming years.
“The people who put [PTT] They did not think about these extensions of leases, “he said.” It will take a change in legislation or regulations. “
But he warned that the government has to clarify the exemption glass, so that profitable developers cannot take advantage of it.
The province did not answer the questions asked by CBC News about how housing cooperatives fit PTT. The Ministry of Finance said it focuses on reducing housing costs and is always open to conversations about new projects.
