Speculation Tax On Its Way In

Much to the chagrin of most B.C. residents, the provincial government’s speculation and vacancy tax will require all B.C. residents to apply for exemption. Although the government assured the province’s homeowners last fall that 99 per cent of residents would qualify for the exemption, residents are upset that they are being treated as speculators first until they can prove otherwise.

Declaration opens on January 21, 2019 and, while residents can submit their exemption forms online, the forms will need to be submitted each and every year.

In an article from the Times Colonist, Kris Sims, B.C. director of the Canadian Taxpayers Federation, is unhappy with the province’s approach to implementing this tax.

“The idea that somehow you’ll automatically have to to pay unless you spent 20 to 40 minutes filling out a form every single year to prove you’re not a speculator…it’s unfair, it’s wrong-headed.”

Sims goes on to say, “the B.C. NDP’s campaign promises around taxing foreign homeowners were vague and now the government seems to be making up policy as it goes.”

In simplest terms, the speculation tax is aimed at taxing properties that aren’t occupied by owners as a primary residence or aren’t occupied by a tenant for more than six months out of the year. For a rental to qualify, however, the property must be leased for at least six months out of the year in increments of 30 days, meaning that the average nightly AirBnB property will likely not count, even if they’re occupied for majority of the year.

For condos and strata properties who don’t allow rentals, owners will be exempt for 2018 and 2019, giving “stratas time to change their bylaws,” says the ministry. But what about condo buildings who enjoy the owner-occupied lifestyle and don’t want to change their bylaws? Unfortunately, this will likely mean that stratas will see an increase number of sales or be forced to change their dynamics to accommodate this tax.

For 2018, the tax rate is 0.5 per cent of the property’s assessed value. In 2019 and following years, the tax rate will increase to 2 per cent for foreign owners and satellite families, and 0.5 per cent for Canadian citizens or permanent residents. The speculation tax is based on ownership status as of December 31 each year and any taxes owing will be due the following July.

To claim your exemption, you must register your property by March 31, 2019. You will be receiving a notice in the mail by the middle of February 2019 and then be able to mail in your registration or do it online.

For a detailed account of what this tax all means to you, here is a link to the province’s informational site: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax.

If you have questions on how this new tax will impact you, give us a call. We know this is a frustrating time for a lot of residents and want to extend our help to make this an easier transition for you. Give us a call at 250-661-9524 or email us at janeswallsgroup@evcanada.com.

Until next time!

Kaley + Mike