If you’re looking to buy a cheap home, Kamloops City Hall might be the best place to get a bargain. Every year, several homes for which the owner has
not paid their property taxes for three consecutive years get put up
for auction by the city. It’s a chance to buy a home for a fraction of the value, but there’s a catch. The homeowner has a year to pay off the outstanding debt to get their house back. And, in the last 20 years, not one sale has stood up for the entire year. “I always get people in here going ,‘Oh, can I
get a great deal on a house?’ And the answer is no,” said Tanya Garost,
the city’s revenue and taxation manager. She said the auction is really a tool to get people to pay their taxes. Garost explained that since many of the homes on
the auction list still have a mortgage, the lending company will always
come to the rescue and pay the taxes so it doesn’t lose interest in the
property. There are about 60 properties on the list for
this year’s auction, but Garost predicts that number will drop to about
10 before the bidding even begins. The city is owed about $400,000 in unpaid property taxes. Though the odds of snagging a cheap house are remote, it can still be a good investment. Typically, the bidding for each property starts at the amount owed in taxes, plus some service charges. The person with the winning bid then cuts a cheque to the city for the amount. When the delinquent homeowner eventually comes to
pay the tax bill, the investor gets their money back, plus the interest
for the time it was held.
The interest rate this year is six per cent, while the bank rate is just one per cent. It’s the homeowner who pays the interest, not the city. The auction will be held in city council chambers at 10 a.m. on Monday, Sept. 26. Garost noted the auction usually attracts about 15 to 20 people each year.
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Tax Sales Richmond:
Properties with three years of outstanding taxes are auctioned to the
highest bidder with a starting price set at the
outstanding taxes plus a
5% administration charge. Once the auction is adjourned, the successful
bidder must pay the full bid price for the the property by cash or a
certified cheque, no later than 4:00pm on the sale date. Once payment has been made, a tax sale charge will appear on the
title. The existing owner has one year to redeem the property by paying
the total outstanding charges and interest costs. When the owner
redeems, the City will return the initial purchase price plus all
interest paid by the original owner to the bidder, and the tax sale
charge will be removed from the title.
It is important to note that, rarely will properties, with
improvements, change hands as a result of the tax sale. Original owner
have the right to redeem the property within 1 year after the tax sale
date. The only benefit to the bidder is usually a reasonable return for
their money. By law, the current property owner must pay the bidder
interest. The interest rate is set by the Province pursuant to section
11(3) of the Taxation (Rural Area) Act.
The current interest rate is
6.00% and will be adjusted quarterly, inline with interest trends.
