City tax sale a good investment
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.