Whether you’re a speculator or not, all homeowners in the largest urban areas of BC will have to apply for exemption from the province’s new speculation tax. Areas subject to the speculation tax are Greater Victoria, Nanaimo, Kelowna and Metro Vancouver including Abbotsford, Mission and Chilliwack (excluding Bowen Island and Lions Bay).
It is the responsibility of all homeowners to apply for exemption from getting taxed before the deadline on March 31st, 2019. If there are multiple owners of a home, a declaration must be completed by each owner, including spouses. Those who do not qualify for exemption, or do not apply, will be sent tax bills due to be paid by July 2nd, 2019. However, you may still get a rebate within six years if you mistakenly pay the speculation tax.
The Ministry of Finance announced that they would start mailing the speculation and vacancy tax declaration letter by mid-February. The Ministry said the imposition of speculation tax on speculators and empty homes may discourage real estate speculation and thereby make housing more affordable. The new tax which was announced in the February 2018 budget was described as a way to encourage owners of empty residences to put their houses up for sell or rent out, especially in areas where the shortage of housing is most felt. Although the aim was to target out-of-province real estate speculators and the government claims that 99% of British Columbians will be exempt from the tax, an estimated two-thirds of those who will be paying will be British Columbians.
The tax rate is 0.5% of a home’s assessed value in 2018 that will be $5,000 per year for a property assessed at $1 million. This rate will go up to 2% in 2019 for out-of-province owners, foreigners and families where more than 50% of income in the household comes from outside of Canada.
Owners are exempt from paying this tax if the property is considered their principal residence, they rent it out at least six months of the year, they are disabled, the property was just inherited, the value is below $150,000, or the property is vacant because the owner is away for medical reasons, residential care, work or spousal separation.
Strata properties (condos and apartments) in buildings where no rentals are allowed will be exempt in 2018 and 2019, to give time to the stratas to change their bylaws. First Nations, local government, charities, co-ops and some non-profit organizations may be exempted from said tax.
British Columbians with second homes who aren’t exempted will still get a tax credit intended to cover the tax on the assessed value up to $400,000, with the remaining value of the property then taxed at the full rate.
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