experts: real estate column Wednesday, October 25, 2006

Quarter shares are going from residential to business classification

We've mentioned our 'lack of like' for fractional ownership many times before ... now there's another reason to avoid them.

By Ozzie Jurock

Quarter shares are going from residential to business classification (if it looks and smells like a hotel it's taxed like one).

In many previous articles we mentioned our 'lack of like' for fractional ownership ... quarter-share and in particular most condo hotels. We also mentioned that the province was contemplating classifying most quarter-share units in resorts as businesses (in effect doubling or tripling taxes).

Now the province is doing just that:

Cost are rising for 1/4 share owners who are finding their taxes doubling and tripling after they buy. Taxes on one vacation unit in a Vancouver Island resort jumped from $3,800 to $15,200 when BC Assessment changed its classification from residential to business in a shift that is hitting resort properties around the province.

At Pender Island's Poets Cove resort in the Gulf Islands, strata fees including taxes tack on almost $1,100 a month to the cost of a quarter-share in a townhouse that is listed for sale at $229,000 for 12 weeks of occupancy a year.

At Bear Mountain residential taxes are set at $6.32 per $1,000 of value for a property while business taxes are $20.86 per $1,000 of value, making business taxes three times pricier than residential.

Major Point: We already thought that common area costs in some 1/4 share developments were high ... now the business qualification makes it even less attractive. Add to this, that re-sales are very tough; indeed (much harder to refinance) the higher operating costs will not help that market.

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