Speculation Tax in British Columbia: What You Need to Know
Where is the tax applicable?
The tax will still be levied in Nanaimo-Lantzville, Kelowna, West Kelowna and Metro Vancouver. The original Fraser Valley regions are being reduced to Mission, Abbotsford, & Chilliwack. The Capital Region District around Victoria on southern Vancouver Island are included; however, Parksville, Qualicum Beach and many Gulf Islands are now exempt.
Who will the tax affect?
The Finance Minster Carole James has stated that the speculation tax focuses on people who are treating our housing market like a stock market. She states: “People in smaller communities, those with cottages at the lake or on the islands, will not pay this tax. People with second homes outside of high-cost, designated urban areas will not pay the tax. We are going after speculators who are clearly taking advantage of the market, leaving homes vacant and driving up prices.”
The tax will affect vacant homes, flippers, vacation homes in urban areas, and out-of-province owners most.
How much is the tax?
The government unveiled three different tax rate structures for the tax:
- The full 2% will be reserved for foreign buyers
- 1% will apply to out of province land owners
- British Columbians who own multiple properties but don’t rent them at least six months of the year will pay 0.5%
- In 2018, the tax rate for all properties subject to the tax is 0.5% on the property value
How will the tax be dealt with for BC residents?
BC residents will go through an up-front system so they don’t need to go through the income tax system.
Are there any exemptions?
Second properties belonging to British Columbians will be eligible for a $400,000 non-refundable tax credit. Therefore, this means that second properties whose assessed value is less that $400,000 will be exempted from paying the speculation tax.
Property owners “facing special circumstances” will be exempt from the tax. This covers properties where the owner or tenant is “undergoing medical care or residing in a hospital, long-term care or a supportive-care facility,” is “temporarily” absent because of their job or the owner is deceased and the estate is under the process of being administered.
The government will be temporarily grandfathering people out of the tax if their second property is in building where strata bylaws prohibit rentals. If a strata council were to pass a new no-rental bylaw, the strata properties will not be eligible for the temporary exemption.
Are there any credits?
British Columbians who are Canadian citizens or permanent residents, and not part of a satellite family, will be eligible for a tax credit of $2000 that is immediately applied against the speculation tax. This credit can only be applied to one property.
How long does a property need to be rented for to be exempt?
From 2019, a long-term rental property will be one where the owner is not living in the property but is able to rent it out for more than six months per year. The property can be rented multiple times in a year, but each tenancy must last at least 30 days.
In 2018, the property must be rented out for just three months of the year.
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