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Owner-occupied Residential Tax Credit
Purpose
The owner-occupied residential tax credit limits increases of the residential portion of provincial non-commercial
property tax to no more than the annual Consumer Price Index (CPI) of Prince Edward Island.
This approach of calculating taxes was taken so Island property owners are no longer vulnerable to possible
spikes in provincial property taxes, and will realize tax savings over time.
How the Program Works
- The benchmark for calculating the credit is the 2002 taxation year or from the date of acquiring the property after 2002.
- The tax credit applies to the residential portion of the provincial, non-commercial property tax only.
It does not apply to municipal property taxes, Waste Watch levies or fire dues.
- The difference between the residential portion of the provincial, non-commercial property taxes and the
annual CPI for Prince Edward Island will show as a tax credit on the tax bill.
Taxes will only increase in excess of the PEI CPI if there are improvements, renovations, or material
changes in use.
For example:
The residential portion of the provincial, non-commercial property taxes for an owner-occupied home is
$500 for the previous taxation year. (CPI limit based on 2.13% PEI Consumer Price Index for the previous year.)
Previous
taxation year
|
Current
taxation year
|
|
| $500.00
|
$550.00
|
10% increase in taxes between previous and current year
|
| |
$510.65
|
2.13% CPI limit on current year taxes
|
| |
$ 39.35
|
Owner-occupied Residential Tax Credit
|
In the example above, taxes for the current year are $550, a 10% increase from the previous year. The tax credit limits the increase to
2.13% (the PEI Consumer Price Index for the previous year); consequently, provincial property tax will not increase beyond $510.65 for the current year. The result is a tax credit of $39.35.
Future Benefit
The above example portrays the tax credit for one taxation year, however, the benefit will continue to accrue in future years when the market value increase in assessment exceeds the Consumer Price Index.
Eligibility
The tax credit applies to owner-occupied residential properties if the residential portion of the provincial,
non-commercial property taxes exceeded the PEI CPI limit.
Residential properties are defined in Section 9(2) of the Real Property Assessment Act as:
“buildings or portions thereof used and occupied on a permanent or seasonal
basis as single or multi-unit dwelling accommodation including complementary
land, structures and services.”
Conditions
The tax credit may not be applicable to owner-occupied residential properties for one or more of the following
reasons:
- The increase in the residential portion of the provincial, non-commercial property taxes did not exceed the CPI limit of the prior year.
- The property is newly built or renovated, which exempts it from receiving the tax credit on the newly
constructed portion for the taxation year during which the construction took place.
- The property (or a portion of) is leased or rented during the taxation year, and therefore is not eligible for the credit.
- When an owner-occupied residential property is transferred, the initial residential portion of the provincial, non-commercial property taxes to the new owner will be calculated and the resulting tax will be used as a benchmark to calculate each succeeding year until the property is transferred to another owner.
Please note:
This page is prepared for information purposes only, and should not be considered a substitute for the applicable statutes. Should there be any conflict between the contents of this page and the statutes, the statutes shall prevail.
|
How to Apply
Complete and return a Request for Owner-occupied Residential Tax Credit form.
Request for the Owner-occupied Residential Tax Credit
Printable version of this form
[102 KB PDF File]
Charlottetown
Shaw Building
Sencabaugh, Linda (Program Application Coordinator)
Dingwell, Kevin (Manager, Property Assessment Services)
MacDonald, Leah (Program Application Coordinator)
Johnston, Carol (Program Application Coordinator)
