If you are over 55 years old and live in British Columbia, you may be eligible to defer the property tax on your home until you sell it or pass away. The Province will charge you a very small simple interest, currently set at 2.5%, and a nominal administration fee. The rate is variable and is never greater than Prime minus 2%. But the best part of this deal is that the interest is simple, as opposed to compound.

The difference is that with compound interest your interest expense grows every year as previous year’s interest is added to the principle. For example, if you borrow $100 at 5% annual, your interest for the first year will be $5. This number will be added to the principle, and the following year your interest will be 5% of $105 or $5.25. With simple interest, even though your interest is added to the principle, it is based only on the original amount. In the above example, it will always be $5. If you compare the interest charges in year one, the difference doesn’t look that great. But over thirty years, your debt will grow to $432 with compound interest and only $245 with simple interest at the same rate of 5%.

In essence, the Province offers you an easy loan at a ridiculously low rate and with simple interest. Foregoing this opportunity just doesn’t seem smart. But only about 30,000 households in BC participate in the program. The reason is that the program is not actively advertised and its potential benefits are not promoted. And why would the government do it?

A typical BC family living in an average house can defer their property taxes until death and invest the amount that they would otherwise pay to the government into a Life Insurance policy. When the last surviving spouse dies, the Life Insurance benefit will pay the tax owing to the government, and have around $200,000 or $300,000 left for their beneficiaries, depending on the amount of property taxes they are paying, their ages, health, etc. And it doesn’t cost anything. The money used to pay the property tax is simply diverted to something better, like building your estate, and the government is OK with it. Sounds too good to be true? Check the government website.

Are you 55 or older? If not, your parents probably are. And who is going to benefit if your parents do it? Opportunities like this don’t come often. Find a good financial advisor and check if this can work for you.

Nikolay Sisan is a Certified Financial Planner and freelance writer in Vancouver.