SPECULATION TAX UPDATE
FROM THE FRASER VALLEY REAL ESTATE BOARD:
On March 26, the BC Government released new information on the annual Speculation tax that was previously announced in the February provincial budget.
Who would be affected:• Foreign or domestic speculators and satellite families: Households with high worldwide income that pay little income tax in BC who leave their property vacant will be subject to the tax.
• Owners of multiple vacant properties in urban centres: British Columbians with vacant properties in urban centres will be eligible for a non-refundable tax credit that offsets a total of $2,000 in Speculation tax payable and this would be immediately applied against the Speculation tax owing. This would make properties valued at up to $400,000 exempt from the new tax. If someone has multiple properties, the tax credit will only apply to one property.
Where it would apply:• Metro Vancouver Regional District (excluding Bowen Island and Electoral Area A, except the part of the electoral area that is the UBC and University Endowment Lands)
• Capital Regional District (excluding the Gulf Islands and Juan de Fuca)
• Nanaimo-Lantzville (excluding Protection Island)
Click here for a map.
Exemptions:• primary residences of British Columbians
• properties used as qualifying long-term rentals:
In 2018, homes would need to be rented out for at least three months.
Starting in 2019, homes will need to be rented out for at least six months, in increments of 30 days or more, to qualify for an exemption.
• special circumstances:
- The owner or tenant is undergoing medical care or residing in a hospital, long term care or 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.
• In 2018, the tax rate for all properties subject to the tax is 0.5% on the property value.
• In 2019 and subsequent years, the tax rates will be as follows:
- 0.5% for British Columbians who are Canadian citizens or permanent residents (and not members of a satellite family) (homes valued up to $400,000 will be eligible for a tax credit to offset the tax)
- 1% for Canadian citizens and permanent residents who do not live in BC
- 2% for foreign investors and satellite families
British Columbians who are Canadian citizens or permanent residents, and not part of a satellite family will be eligible for a tax credit that is immediately applied against the Speculation tax. The credit will offset a total of $2,000 in Speculation tax payable. For homeowners with multiple properties, the tax credit will only apply to one property.
The tax credit is designed so British Columbians do not pay tax on a second home valued at up to $400,000. For more expensive vacant properties, the credit ensures that tax only applies to the value of the property above $400,000.
Foreign owners and satellite families can avoid the tax by renting their property. They will be able to offset a portion of the Speculation tax with a non-refundable tax credit if they report income in BC.
Domestic speculators (Canadians who keep their primary residence in another province), can avoid the Speculation tax by renting out their BC property for six months of the year. They will be able to offset a portion of the tax with a non-refundable tax credit if they report income in BC.