On Monday, the provincial government announced it is making some changes to the speculation tax, which was first announced last month as part of the budget.
The government expects to introduce legislation in the fall to make the tax part of law and they say 99 per cent of British Columbians will be exempt from paying the tax. The tax will be applied on properties that are not the primary residences of the owner — they’re not living there for more than six months per year — and that aren’t being occupied by a tenant when the owner isn’t there.
“The speculation tax focuses on people who are treating our housing market like a stock market,” Finance Minister Carole James said in a statement on Monday. “So 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.”
Here are five things to know about the revised tax bill:
Previously, a number of areas where British Columbians owned vacation homes, cabins or similar were to be hit by the tax, essentially meaning that people would be forced to pick one property as their primary residence and paying the speculation tax on the other.
Now, second properties will only be hit with the speculation tax if they’re in Metro Vancouver, the Capital Regional District (but excluding the Gulf Islands and the Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission.
Changing rates from 2018 to 2019
All properties that are affected by the tax will pay a rate of 0.5 per cent in 2018. In 2019, the rates will change.
A lower tax rate for B.C. residents
From 2019, B.C. residents who are subject to the tax will pay a rate of 0.5 per cent; Canadians from outside B.C. who have properties in the province that are subject to the tax will pay a 1 per cent tax rate, while non-Canadians will continue to be hit with the previously-announced 2 per cent rate.
Second properties belonging to British Columbians will be eligible for a $400,000 non-refundable tax credit, meaning 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.
Phased-in long term rental rule
If a secondary property is rented out as a long-term rental, it will be exempt from the tax.
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.
Source: Vancouver Sun