Homeowners in most urban communities across the province will have to apply this spring – and every year after that – for an exemption to the province’s new speculation and vacancy tax, a real estate levy that is supposed to target only 1 per cent of British Columbians.

Notices to 1.6 million homeowners in the regions subject to the speculation and vacancy tax (SVT) will start landing in mailboxes later this week and homeowners must apply for an exemption from the tax. The communities include most of Metro Vancouver and Greater Victoria, as well as Kelowna, Nanaimo and the Fraser Valley. Most British Columbian homeowners will be exempt as long as the property is their primary home.

The BC Liberal Opposition, hoping to pick up a crucial seat in the legislature in a Nanaimo by-election later this month, was quick to capitalize on the notices, hoping residents will use the Jan. 30 vote to register their displeasure about the tax with the NDP government. Liberal candidate Tony Harris warned in a social-media posting on Wednesday: “If you don’t apply for an exemption from their so-called speculation tax, the NDP government [is] planning to tax you by default.”

The tax, announced last February in the provincial budget, was initially described as targeting non-residents who pay no income tax in B.C. but own a home there. It was rolled out with other measures the government designed to “stabilize” a red-hot housing market.

However, the tax is expected to capture many British Columbians who have vacation homes, although the government has partly retreated, reducing the tax rate and the regions where it will apply.

The province now describes the tax as a tool to curb real estate speculation, and to reduce the number of empty homes, while raising revenue to pay for affordable housing. The budget forecasts annual revenues of $185-million from the tax. The rate for 2019 is 0.5 per cent of the assessed value for all properties owned by Canadians that are subject to the tax. For foreign owners, or those who pay the majority of their income tax in another country, the rate is 2 per cent.

And the tax is applied by default.

The deadline to declare an exemption is March 31. Residential property owners who do not complete their declaration before the deadline will receive a tax notice of assessment. The tax must be paid by early July. Each owner on the land title has to fill out the paperwork each year, which the government says should take 10-20 minutes.

Shirley Bond, the Liberal finance critic, said the new details of how the tax will be collected will likely shock many homeowners.

“I don’t think anyone expected a negative-billing option would be used,” she said in an interview. “If you are a resident of Nanaimo, or Abbotsford, or West Kelowna, you have to register or you are going to get a tax bill. I think there will be a great deal of confusion.”

The Nanaimo by-election is a crucial test for the minority NDP government, which is holding onto power through an agreement with the three-member Green Party caucus. If the Liberals take the seat – a traditional stronghold for the New Democrats – the standings in the legislature would be tied. The Speaker of the House, traditionally a non-partisan job, would then be regularly voting to break ties – a highly partisan role.

Ms. Bond said Nanaimo voters were already concerned about the tax, because it exempts neighbouring communities. The manner in which the government plans to collect the tax will only heighten those concerns, she said.

Finance Ministry officials, in a media briefing on Wednesday, said British Columbians who fail to file the declaration will get a tax bill by late April. If they are eligible for an exemption but forgot to file the forms, they will have an opportunity to apply then.