$2.5M Kelowna industrial property sells for 4 times minimum price at city tax sale
An industrial property in Kelowna valued at approximately $2.5 million was sold at the city’s tax sale yesterday for $510,000 even though the taxes owned on it were only $116,157.
It was one of five properties that made it to the tax sale yesterday, Sept. 27, which is rare in the city’s history. All five properties were subject to bidding wars that saw one sell for 29 times the amount of taxes owed.
“I was surprised,” Patrick Gramiak, revenue supervisor for the City of Kelowna, told iNFOnews.ca. “I was hoping none of them would go. This is not our business. We’re not supposed to be doing this – meaning we hope everybody pays their taxes.”
Each year, cities throughout B.C. take properties to tax sales on the last Monday of September. Taxes have to be unpaid for three years in order for the properties to actually go to the sale and the owners have up until 10 a.m. that day to pay, at least, the 2019 taxes in order to keep them out of the sale.
Most years, all those taxes are paid, but that was not the case this year.
Gramiak, who served as the auctioneer, took the bidding up in $5,000 increments so there were dozens of bids on each of the properties. He could not say how many individuals bid on each.
The Jim Bailey industrial site was valued by B.C. Assessment at about $2.5 million.
An article published last week by iNFOnews.ca about that property brought inquiries about the tax sale from as far away as New Jersey.
READ MORE: This $2.5M Kelowna industrial site could be yours for $116K at city tax sale
The $510,000 bidder had to leave payment with the city and now has to wait a year. If the owner does not redeem the property, the bidder gets it for $510,000.
In order to redeem the property, the owner has to pay the $116,157 to the city for the taxes owed, plus interest on the full $510,000.
If the owner does that, the high bidder gets the money back with interest, which is paid by the original owner.
If the owner does not redeem the property, the city keeps $116,157 plus interest and the remaining money, with interest, goes to the original owner.
Gramiak couldn’t say who the top bidder was but pointed out that in most tax sale cases banks get involved if there is a mortgage on the property.
READ MORE: Most expensive house in B.C. Interior could be sold for property taxes owed
That’s because, if the property is not redeemed by the owner and there is a mortgage, it “drops off.” That means the new owner doesn’t have to pay it, nor does the old owner, so the banks usually don’t let that happen. The original owner is still liable for liens and some other charges against the property.
Of the other four properties that made it to the sale, the one fetching the second highest bid had the second highest amount of taxes owed out of more than 30 properties that were originally on the tax sale list.
Taxes owed on that home, at 411 Francis Ave., were $16,615. It sold for $400,000, which is 24 times the minimum or upset price. It’s a four bedroom, two bathroom single-family home that was assessed at $934,000.
A home at 471 Birch Ave. that owed $12,490 in taxes sold for 29 times that amount at $360,000. That’s a two bedroom, one bathroom house valued at $819,000.
A property at #211-400 Sutton Cres., which owed $5,260 in taxes, sold for 19 times that amount at $100,000. That’s a one bedroom strata unit assessed at $224,000.
Another home, at 920 Pitcairn Crt., sold for $220,000, a mere 14 times the property taxes owed of $15,983. That’s a four bedroom, two bathroom house assessed at $749,000.
While having properties go to a tax sale is highly unusual in Kelowna, it’s even more unusual that they actually “flip” to a new owner, Gramiak said. That’s only happened once or twice in the last 18 years.
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