Manitoba has renamed its previously available education property tax credit for residential renters and extended it to tenants in subsidized housing. The new Renters Tax Credit, announced in the 2022 provincial budget earlier this week, promises a $525 refundable credit to all eligible recipients who claim it on their personal income tax returns.
The new credit will be more straightforwardly calculated than the previous formula, which was pegged to the lesser of either 20 per cent of the claimant’s annual rent or a designated maximum available amount, set at $525 last year. (Homeowners are eligible to recoup the lesser of 75 per cent of school taxes paid on their principal residence or the maximum available credit.) Now, it will be calculated as a fixed monthly rate of $43.75 for the number of months rented in a tax year.
An estimated 45,000 additional renter households can now claim the credit with the extension of eligibility to tenants in subsidized housing, equating to an extra $23.6 million in provincial spending this year. Even so, for some recipients, the credit will be less generous than it was a decade ago when the maximum available amount was $700.
“For a household paying the average $1,000 per month in rent, the Renters Tax Credit is equal to over half of one month’s rent,” the budget document states.
Meanwhile, rental housing landlords and other residential and farm ratepayers can look forward to a larger rebate this year as part of the phased elimination of education property tax. For 2022, they’ll be reimbursed for 37.5 per cent of paid education property taxes — an increase from the 25 per cent rebate provided in 2021.
The provincial government expects to return approximately $350 million to property taxpayers, up from $246.5 million last year. Next year, a 50 per cent rebate is promised, representing a provincial payout of more than $453 million.
“For residential properties, net school tax (per cent tax paid) will decrease to 35 per cent in 2023 from 71 per cent before the introduction of the Education Property Tax Rebate as the value of tax credit and rebate savings increase to $463 million in 2023 from $208 million in 2020,” the budget document states.
