Tax Credits for Owner-Occupied Residential Properties

The EC2024-653 regulation amends the Real Property Tax Act (R.S.P.E.I. 1988, Cap. R-5) by introducing new provisions concerning tax credits for owner-occupied residential properties and leased or rented multiple dwelling accommodation units. Approved by the Lieutenant Governor in Council on June 19, 2024, these amendments aim to establish clearer guidelines and formulas for calculating tax credits that will be applicable from the 2024 tax year onward.
Specifically, the regulation introduces two new sections: 24.3 for owner-occupied residential properties and 24.4 for multiple dwelling accommodation units. These sections outline the eligibility criteria for property owners and lessors to receive tax credits, thereby improving financial support for these groups. For individuals qualifying under section 5.5 of the Act, the tax credit amount for owner-occupied properties is calculated using a defined formula.
This formula [A-((B+C) x (1+D))] x [(E/F) x ((1.50 – G)/100)] where A represents the assessment of the owner-occupied residential property as of January 1, 2024; B reflects assessment values based on the property’s ownership status as of specific dates; C accounts for the assessed value of new construction or property changes; D indicates the percentage increase in property assessment for 2024; E and F denote the number of days the property was owned during the year and the total number of days in the year, respectively; and G represents the tax credit amount per $100 of assessment eligible under section 5 as of December 31, 2023. If the calculated tax credit yields a negative value, it will default to $0.
For leased or rented multiple dwelling units, the tax credit calculation follows a similar formula, using analogous variables: A is the assessment of the non-commercial realty portion designated for multiple dwelling units as of January 1, 2024; B pertains to the assessment values based on the acquisition date; C considers new construction or changes in the property; D specifies the increase percentage for 2024; E and F indicate ownership days and total days in the year, respectively; and G denotes the tax credit amount per $100 of assessment eligible as of December 31, 2023. The same provision for negative values applies, ensuring that no tax credit is granted if calculations produce a negative result.
The amendments represented by EC2024-653 reflect a strategic initiative by the government to improve tax relief for property owners and renters. By providing clear formulas for tax credit calculations, the government seeks to offer equitable support based on property assessments and ownership timelines. This regulatory change has the potential to encourage property ownership and investment in residential properties, ultimately contributing to the stability and growth of the housing market. In conclusion, the modifications to the Real Property Tax Act Regulations create a comprehensive framework for tax credits, aligning property taxation policies with current economic conditions and promoting fairer tax practices in Prince Edward Island.
Prince Edward Island (EC2024-653) June 29, 2024