Understanding the Changes to B.C.’s Property Tax Deferment Program & Why It Matters for Your Mortgage
If you’re a homeowner in British Columbia, you may have heard the provincial government is reforming the property tax deferment program that lets qualified owners delay paying their annual property taxes. The changes are part of the 2026 B.C. Budget, and while deferral is still available, there are important updates that could affect your financial and mortgage planning.
What Is the Property Tax Deferment Program?
Before we get into the updates, here’s a quick refresher: the property tax deferment program allows eligible B.C. homeowners — often those 55 or older, people with disabilities, or families with children — to defer (postpone) their annual property tax payment. Instead of paying the tax bill each year, the province pays it on your behalf and places a lien on your property. You then repay the deferred amount (plus interest) when you sell, refinance, or choose to repay earlier.
Many people saw this as a useful tool to preserve cash flow especially if they had limited income but plenty of home equity.
What’s Changing in 2026?
Under the latest provincial budget, the key change announced is to how interest is charged on deferred property taxes:
• Beginning with taxes deferred in 2026 and beyond, interest will be charged at prime + 2%, compounded monthly.
• Previously, many deferments had much lower interest, sometimes even simple interest, which made the program a very inexpensive way to defer costs.
In other words, while the deferment option hasn’t disappeared, it’s now a more expensive form of borrowing than it used to be.
Why This Matters for Mortgage Planning
If you’re thinking about refinancing your mortgage whether to access equity, consolidate debt, make renovations, or adjust your payment strategy you need to be aware of how any deferred property taxes show up in your finances.
Lenders require that all outstanding property tax amounts be paid out (cleared) before a refinance can proceed.
That’s because deferred taxes represent a lien on your home and rank equally with (or ahead of) other debts secured by your property. Lenders want a clear title before offering new terms.
So if you’re holding deferred taxes and thinking about refinancing — for example, to reduce your rate, shorten your amortization, or unlock equity — plan ahead:
✔️ Get a payout quote from the province to understand what it will cost to clear the deferred amounts.
✔️ Include that cost in your overall refinance strategy. If paying out the deferment boosts your mortgage balance, how will that change your monthly payment or loan-to-value?
✔️ Compare options — sometimes paying out now makes sense, other times it might be better to wait until a later date if your long-term goals support that.
Have a Clear Strategy Before You Decide
Whether you’re thinking about a refinance, renewal, or even a future sale, having a clear plan is critical. Changes to government programs like the property tax deferment rules can influence your costs, your borrowing flexibility, and ultimately your financial goals.
A few strategy questions to explore with your broker or financial advisor:
✅ Should I pay out the deferred taxes now or later?
✅ What does that do to my refinanced payment and cash flow?
✅ How does this align with my long-term goals — like retirement, downsizing, or supporting family?
Final Thought
Government programs change and when they do, they can affect your mortgage plans more than you might expect. Don’t let a lien like deferred taxes catch you off guard when refinancing. A proactive approach and clear strategy help ensure your mortgage supports your life goals, not the other way around.
If you’re considering refinancing or just want to understand how these changes might impact your plan, let’s talk. I can help walk you through the numbers and your options.