The B.C. government has announced it is raising the Speculation and Vacancy Tax on Dec. 31 from 0.5 per cent to two per cent for foreign owners and for satellite families, the majority of whose income is not reported on a Canadian tax return.
Some new exemptions to the tax will be brought in while others currently in place will be phased out.
“When we introduced the Speculation and Vacancy Tax, our province was at the peak of a real estate crisis and moderation in the market was long overdue,” said Finance Minister Carole James.
Based on the data collected from the first year, the government says the tax is working as it was designed to — capturing speculators, foreign owners and people who own vacant homes.
The next phase of the tax brings:
An exemption for property owners who are members of the Canadian Armed Forces while in active service and their spouses.
An exemption for people who own properties which are only accessible by water.
An end on Dec. 31, 2019, to the exemption for foreign owners of vacant land.
The exemption for empty strata properties in buildings where rentals are banned will be phased out by Dec. 31, 2021.
A strata title allows individual ownership of part of a property — generally either an apartment or townhouse — with shared ownership in the remainder of the building.
Under the new rules announced Tuesday, if the strata lot remains unoccupied, even if the building’s bylaws prohibit rentals, the tax will be levied.
Introduced Dec. 31, 2018, the tax targets homes in the most populated areas of B.C. that are not declared as a primary residence or are not rented out for at least three months a year. More than 99 per cent of British Columbians are exempt.
“There are those who oppose the tax and others who want to implement additional tax. I look forward to continuing discussions as we work together to tackle the housing crisis,” she said.
The province is increasing identification and other information required of foreign owners, corporations and trusts in its applications for exemption — changes aimed at improving compliance and preventing tax avoidance.
The Finance Ministry estimates foreign owners brought in $115 million since the tax was introduced — money the province says goes to fund affordable housing projects.
In September, James said the tax has been paid by 11,783 property owners, representing 9,386 properties.by