2023 Rental Unit Property Tax Subsidy

 

The Rental Unit Property Tax Subsidy has been created to help offset increasing costs for landlords associated with the 2023 rental freeze. The subsidy aims to provide relief on provincial property taxes payable in 2023 and decrease landlord property tax costs. This will allow property owners of rental units to redirect funds toward other cost increases.

How can I tell if I am eligible?

Long-term rental properties are eligible for the Rental Unit Property Tax Subsidy.

For purposes of the Rental Unit Property Tax Subsidy Program, a long-term residential rental property is one that contains a residential rental unit that will be rented to a lessee on a continuous basis of one month or more, for at least six months during the 2023 year, was in a long-term rental arrangement as at December 31, 2022, and is not exempt from the Rental of Residential Property Act R.S.P.E.I. 1988, Cap. R-13.1. For further clarity, a long-term rental property must be a self-contained residential rental unit and does not include an owner-occupied property (e.g. a room or basement unit rented out in the owner’s principal residence).

For properties that are mixed use (i.e. commercial and residential), the commercial portion is not eligible for the subsidy.

Eligible properties must have been owned on December 31, 2022 and ownership must not have changed prior to the application.

Only properties where 2023 rental rates are not increased above 2022 rental rates are eligible for the Rental Unit Property Tax Subsidy. Properties must not have not been approved by the Island Regulatory and Appeals Commission (IRAC) under the Rental of Residential Property Act for an increase to the maximum allowable rent for 2023 for this property, and must not increase rents in 2023 above the existing 2022 rates for the property to be eligible.

What are the subsidy rates?

Subsidy rates will be determined by how the rental unit is heated:

• Owners of long-term units where heat is included in the rent and oil is the primary source of heat will receive a subsidy of $0.75 per $100 of tax assessed value;
• Owners of long-term units where heat is included and a source other than oil is considered the primary heat (e.g. electric, district heating) will receive $0.375 per $100 of tax assessed value; and
• Owners of long-term rentals where heat is not included in the rent will receive a subsidy of $0.375 per $100 of tax assessed value.

The maximum amount of support received through the Rental Unit Property Tax Subsidy will be capped at 3% or 2% of rental income depending on how the unit is heated. Eligible applicants who heat with oil as the primary source and include heat in the monthly rent will have their property tax subsidy capped at 3% of annual rental income. All other properties will have their subsidy capped at 2%.

How do I apply for this funding?

This application is now closed.

What is the application deadline?

Applications will be accepted until May 31, 2023. 

What do I need to apply?

Property owners or authorized company directors must apply and receive approval from the Provincial Taxation Office on each property individually based on property identification number (PID).

Applicants must provide ownership and contact information, as well as information on the primary heating source for the property, whether heat is included in the monthly rental rate, and whether the property is a multi-use (e.g. commercial and residential) building.

Applicants will have to provide the gross annual rental revenue for the property. For purposes of the Rental Unit Property Tax Subsidy, gross annual rental revenue is the sum of a unit’s allowable monthly rental rate as of December 31, 2022 multiplied by the number of months the unit is available for long-term rental in 2023, for each long-term residential rental unit on the property. Other income generated by the property (e.g. commercial rental, laundry, interest, short-term/AirBnB rental) is not included in gross annual revenue.

For multi-unit properties, applicants must upload a rent roll outlining the rental rate for each unit.

For single-unit properties, applicants must upload a copy of the lease agreement.

By submitting an application, applicants are in agreement and certifying that:

• They are an owner, or an authorized company officer of the property being applied for;
• The information within the application is true and accurate;
• The information within the application may be subject to audit or verification by the Government of PEI’s Department of Finance;
• They have not been approved by the Island Regulatory and Appeals Commission (IRAC) under the Rental of Residential Property Act for an increase to the maximum allowable rent for 2023 for this property;
• They will not increase rents in 2023 above the existing 2022 rates for the property;
• The Department of Finance may access the property tax information for the property that is the subject of this application for purposes of administering this Program; and
• The Department of Finance may use the information in this application to verify and/or update the property tax and assessment records for the property which is the subject of this application, including owner-occupied residential property status and/or eligibility for other property tax credits.

When will I receive the subsidy?

Properties eligible for Rental Unit Property Tax Subsidy will have the payments applied directly to their property tax accounts. Applications that are received by May 31, 2023 will receive a revised statement of account showing application of the payment in August 2023.

Examples of the Rental Unit Property Tax Subsidy

Example 1

Jim owns a single-family unit he rents out that has a property tax assessed value of $56,000 and he collects $23,000 in rent annually. He heats the unit with oil as the primary source and heat is included in rent, so the subsidy rate for the property is $0.75 per $100 assessment. Jim will receive a subsidy of $420 against his 2023 Property Taxes Payable.

Example 2

Brian and Robert own a 12-unit apartment building that has a property tax assessed value of $1,560,000 and they collect $288,000 in rent annually. The units in the building are heated with electricity as the primary source, so the subsidy rate for the property is $0.375 per $100 assessment. Due to the 2% cap of rental income Brian and Robert would be eligible for a maximum subsidy of $5,760 against their 2023 Property Taxes Payable.

Example 3

Heather owns a 12-unit apartment building that has a property tax assessed value of $756,000, and she collects $158,400 in rent annually. The units in the building are not heated by the owner, so the subsidy rate for the property is $0.375 per $100 assessment. Heather will receive a subsidy of $2,835 against her 2023 Property Taxes Payable.

Example 4

Manisha and Dharminder own a 12-unit apartment building that has a property tax assessed value of $2,358,000, and they collect $216,000 in rent annually. The units in the building are heated with oil as the primary source and heat is included in rent, so the subsidy rate for the property is $0.75 per $100 assessment. Due to the 3% cap on rental income for oil heated, heat included units Manisha and Dharminder would be eligible for a maximum subsidy of $6,480 subsidy against their 2023 Property Taxes Payable.

How to pay property tax payable: 

Islanders are reminded that property tax notices for the 2023 tax year were mailed out on May 5, 2023, and payment installments for 2023 are due on May 31, August 31, and November 30, 2023. Please check Property Tax Payments for more information on payment options.

If you do not receive your property tax assessment, please visit the Provincial Taxation Office located on the 1st Floor of the Shaw Building at 95 Rochford Street or call 902-368-4070.

Contact information

For more information about the Rental Unit Property Tax Subsidy, contact the Provincial Taxation Office at 902-368-4070.