B.C. homeowners required to apply if they want exemption from speculation tax

Dated: January 17 2019

Views: 30

B.C. homeowners required to apply if they want exemption from speculation tax

All homeowners in B.C.’s largest urban centres will need to apply for exemptions from the province’s new speculation tax or receive a bill, whether or not they are speculators, the government announced Tuesday.

The Ministry of Finance said letters outlining the first speculation tax fees and exemption processes will begin arriving at all homes in Greater Victoria, Nanaimo, Kelowna and Metro Vancouver (excluding Bowen Island and Lions Bay, but including Abbotsford, Mission and Chilliwack) starting this week.

 
article continues below
 

It will be up to all homeowners to apply for exemptions, with a deadline of March 31. Those who don’t apply, or who don’t qualify, will be sent tax bills due to be paid by July 2.

The opt-out process will become an annual event for property owners under the new speculation tax rules. People who pay mistakenly can get a rebate within six years, according to the ministry.

Finance Minister Carole James was not available for an interview, but her ministry said the exemption process “will help identify speculators and empty homes, allowing the government to crack down on speculation and make housing more affordable.”

The government’s decision to levy every property owner in major urban centres with a tax notice, and then force them to apply for exemptions, is a backward way to implement a misguided tax, said Liberal MLA Shirley Bond.

“Just when you think a botched tax can’t get any worse, it does,” Bond said. “Now residents in communities like Nanaimo, Kelowna and Abbotsford, to name a few, have to register to be exempt from this tax or they will get a bill in the mail for a tax they shouldn’t be paying.

“It is absolutely astounding to me for an ill-conceived tax that does not target legitimate speculators — the majority of people impacted by this tax are hard-working British Columbians. On every front, this is a mess.”

The NDP government’s speculation tax was announced in the February 2018 budget and described as a way to encourage owners of empty residences to put them onto the rental market, or sell, in areas where housing is unaffordable and rental vacancy rates are low.

Although first billed as a surcharge on out-of-province real-estate speculators, it was later revealed that an estimated two-thirds of those who will pay the tax will be British Columbians.

Public blowback forced James to exempt such areas as the Gulf Islands, as well as to water down the rate before the tax was passed into law in the fall.

Because the tax is retroactive, the first letters will be for taxes incurred in the 2018 calendar year — before the tax rules were finalized.

The tax rate is 0.5 per cent of a home’s assessed value in 2018, which would be $5,000 a year for a property assessed at $1 million. Starting in 2019, the rate rises to two per cent for out-of-province owners, foreigners and satellite families (households where more than 50 per cent of income comes from outside Canada).

Owners are exempt from the tax if it is their principal residence, they rent it at least six months of the year (only three months is required in 2018), they are disabled, the property was just inherited, it’s valued at less than $150,000, or a person was away and it was vacant due to medical reasons, residential care, work or spousal separation.

Condos and apartments in buildings where stratas ban rentals are also exempt, but only for 2018 and 2019, to give stratas time to change their bylaws, according to the ministry.

Exemptions are available for First Nations, local governments, charities, co-ops, some not-for-profit organizations, and developers working on construction or renovation of property.

British Columbians with second homes who are not exempt will get a 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.

Blog author image

Steven Axford

Steve Axford grew up in Victoria, BC and has always been active in his community. Steve is a Victoria Cougars Hockey Team alumni as well as a Victoria Shamrocks (intermediate) alumni. During his time....

Latest Blog Posts

Choosing Flooring: 6 Things You Need to Know

When it comes to choosing new flooring for your home or apartment, the options can be overwhelming. Almost every type of flooring has some sort of advantage over other kinds, and taking in all the

Read More

Consumer interest in homeownership in Victoria unwavering over course of pandemic

A total of 989 properties sold in the Victoria Real Estate Board region this September, 60.6 per cent more than the 616 properties sold in September 2019 and 1 per cent more than the previous month

Read More

Understanding Canada’s Record Home Sales Last Month, And Why It’s Likely To Continue

Canada’s late Spring real estate market continues, but some of the pent-up demand has caught up. Canadian Real Estate Association (CREA) data show a new all-time record for August

Read More

Victoria real estate market experiences an active summer

A total of 979 properties sold in the Victoria Real Estate Board region this August, 48.1 per cent more than the 661 properties sold in August 2019 and exactly the same total as the previous month

Read More