On October 16, BC Finance Minister Carole James introduced a proposed Speculation and Vacancy tax (Bill 45) on residential properties saying the government wants to “ensure satellite families and people who use local services without paying BC income taxes contribute their fair share.”
James says the revenue raised from the Speculation and Vacancy tax will be used to fund affordable housing projects and will help to boost the housing supply by encouraging property owners to either make their vacant homes available to renters, or sell them.
All the municipalities within the Fraser Valley Real Estate Board are included in the designated taxable region of Bill 45.
BC Real Estate Association response
BCREA issued a news release in response to the proposed tax that said:
“First and foremost, BCREA and its 11 regional real estate boards thanks the provincial government for addressing many of the concerns BC REALTORS® voiced about potential unintended impacts of a speculation tax.
“We’re reviewing the Bill in more detail and look forward to the opportunity to provide the province with BC REALTOR® insight on the implementation of Bill 45 to ensure that the best interests of homeowners are served.”
Tax rates
The proposed legislation would impose a tax of either 0.5 per cent, one per cent or two per cent on the assessed value of a vacant property starting in the 2019 taxation year. For the 2018 tax year, there would be a 0.5 per cent on all properties subject to the tax.
A two per cent tax would apply to foreign owners and those who don’t report most of their income on Canadian tax returns, referred to as ‘satellite families’.
Out of province Canadian citizens and permanent residents who don’t reside in BC would pay one per cent on their homes assessed value. BC residents who own a secondary home and don’t rent it out would pay a 0.5 per cent tax.
Exemptions
The Speculation and Vacancy tax would be exempt for:
- British Columbians experiencing hardships such as illness or divorce
- owners of properties that are being developed or renovated
- strata units from a vacancy tax for 2018 and 2019 where strata restrictions prohibit rentals
- Reserve lands, treaty lands and lands of self-governing Indigenous Nations not part of the taxable regions
- Islands that are accessible only by air or water are not part of the taxable regions
Other exemptions in the proposed tax are some residential properties owned by: Indigenous Nations, municipalities, regional districts, governments and other public bodies, registered charities, housing co-ops and certain not-for-profit organizations.
To answer your questions about the proposed tax, go to the BC Government website here.