Big tax changes for renters

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Hey there, time traveller!
This article was published 04/06/2021 (437 days ago), so information in it may no longer be current.

Tax time is now in the rearview mirror. It can be a scramble to get all the paper and receipts ready for the deadline, but filing is important. Many benefits, such as the Climate Action Incentive credit for carbon pricing and the Canada Child Benefit, depend on tax filings.

Tenants in West Broadway and across Manitoba can expect to see some big changes come tax time next year. These changes spring from Bill 71.

This provincial legislation reduces the education property tax, with a 25 per cent rebate on the pre-credit (gross) education taxes paid, for landlords and other owners of residential and farm properties. Alongside this, the $700 education property tax credit goes down 25 per cent to $525 for property owners and renters. Owners get rebate cheques this summer. Based on an example tax bill used by Manitoba Finance, an owner who owed $1,700 in school taxes would save $250 on their bill because of these changes.

Photo by Dylon Martin Changes to the way education taxes are paid may affect Manitoba renters. Will the savings for property owners be passed on?

For renters, the situation is more complicated.

In 2021, tenants will pay the 1.6 per cent rent increase set out in the yearly guideline set by the Residential Tenancies Branch (RTB). This is so unless the RTB approves an above-guideline increase for the landlord. In the 2019-20 fiscal year, the RTB approved all 310 requested above-guideline increases, which affected over 20,000 rental homes.

The province intends to pass on the education tax savings to tenants with rent increase guidelines of 0 per cent for 2022 and 2023. Manitoba Finance provides an example case of a tenant paying $1,200 in rent a month. This renter, under Manitoba’s directive on rent increases, will save $55 in 2022 compared to a scenario where the yearly guideline is set at 1.6 per cent and they get the full $700 tax credit. Manitoba’s sample case does not touch on a hypothetical rent guideline for 2023.

The 2021 education tax rebate is part of a longer-term plan to totally eliminate school property taxes.

Manitoba Finance says they expect scrapping these taxes will lead to lower operating costs for landlords, which “is expected to be reflected in the rent levels”.

Whether this windfall for landlords of eliminating education taxes is passed onto tenants depends on the RTB.

Will it adequately factor in reduced operating costs from lower property taxes when setting rents and reviewing rent hike requests in future years? Or will it regulate rents as if nothing happened?

Dylon Martin

Dylon Martin
West Broadway community correspondent

Dylon Martin is a community correspondent for West Broadway.

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