Speculation Tax details released
Property owners in the East Kootenay will not be included in the proposed Speculation Tax.
Property speculators are being targeted and over 99% of British Columbians are exempted from the proposed Speculation tax, says a provincial government press release following the announcement of details surrounding the controversial tax.
Carole James, Minister of Finance, made the announcement today while releasing details of the new tax on speculators, which was announced in the February budget.
“Our government wants to make sure people who live and work here are able to find and afford a good home in their community,” said James. “For too long, this housing crisis was allowed to escalate, and it has hurt working families, renters, students, seniors and others around the province. With this new tax, we’re targeting speculation in the housing market and freeing up vacant housing to be homes for British Columbians.”
The tax details released today contain a series of thresholds, exemptions and geographic refinements that serve to focus their reach on people who own multiple homes left empty in overheated markets, while making sure that British Columbians who own vacation properties are largely exempted, the Ministry of Finance stated in a press release.
“The speculation tax focuses on people who are treating our housing market like a stock market,” James said, adding, “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.”
Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission are the areas where the tax will be applied.
The ministry says a rate design is proposed that will see British Columbians who are subject to the tax, paying lower rates than owners from outside the province in 2019 and beyond. Canadians from other provinces will have a rate of one per cent in 2019 and beyond, while foreign investors and satellite families will pay a two per cent rate.
“We have focused the geographic areas so this tax only applies in urban housing markets hardest hit by this crisis,” said James. “With so many people desperate to find good homes in these urban areas, we need to take every step we can to free up and create more housing opportunities.”
In 2018, the tax rate for all properties subject to the tax is 0.5% of the property value. In 2019 and subsequent years, the tax rates will be as follows:
* Two per cent for foreign investors and satellite families;
* One per cent for Canadian citizens and permanent residents who do not live in British Columbia; and
* 0.5% for British Columbians who are Canadian citizens or permanent residents (and not members of a satellite family).
There are exemptions for British Columbians’ primary residences and for qualifying long-term rentals.
British Columbians with vacant second homes will be eligible for a non-refundable tax credit that is immediately applied against the speculation tax. This credit will offset a total of $2,000 in speculation tax payable. This tax credit will ensure that British Columbians do not pay tax on a second home valued up to $400,000, the ministry related.
A long-term rental is defined as a property that is rented out for at least six months out of the calendar year in increments of at least 30 days. In 2018, a long-term rental is a property that is rented out for three months of that year.
There will be exemptions for homeowners facing special circumstances. These include:
* The owner or tenant is undergoing medical care or residing in a hospital, long-term care or a supportive-care facility;
* The owner or tenant is temporarily absent for work purposes;
* The registered owner is deceased, and the estate is in the process of being administered.