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Email this8:42 am
December 17, 2016
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B.C. [Property] Speculation Tax
Urban centres throughout the province are in a housing crisis. Rents and home prices have surged past local incomes and, in many communities, vacancy rates sit close to 0%.
Speculation has contributed to runaway prices and made it difficult for British Columbians to find a home they can afford. This is hurting people, businesses and communities.
The speculation tax works to ensure that British Columbians can afford to live in their own province. It will push speculators out of the housing market, and help turn vacant and underutilized properties back into homes for people who live and work in our province. The tax will work to increase the supply of available housing in designated urban centres, helping to ensure our teachers, carpenters and small business owners can live where they work.
The tax is designed to capture foreign and domestic speculators, satellite families who live in B.C. but do not pay their share of income taxes, as well as homeowners who hold vacant property in designated urban centres. Over 99% of British Columbians are estimated to be exempt, because they will not have a vacant second home in the affected areas.
[...]
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:
• 2% for foreign investors and satellite families;
• 1% for Canadian citizens and permanent residents who do not live in British
Columbia; and
• 0.5% for British Columbians who are Canadian citizens or permanent residents
(and not members of a satellite family).
https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/publications/is-2018-001-speculation-tax.pdf
9:05 am
October 27, 2013
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I am all for tempering the rate of housing price increases to make housing more affordable in the expensive regions of BC, but the tax as currently proposed is too broad. It is one thing to tax flippers and speculators, and one thing to tax foreigners who keep houses empty or do not rent full time at 'arms length' to families in need of housing, but is counterproductive to tax vacation properties for any Canadian resident. It is going to cause a major slump in attracting summer tourists, and a net cost to the economy, as they shed their vacation properties.
A valuable part of the local economy is builders and developers building complexes designed for recreation and not for full time housing. What will happen is builders and developers will simply cut back on the rate of build and jobs will be lost along the way. In other words, affordable housing supply will not increase at all because that is not done on spec (purpose built apartment rentals aside).
What the government could do to increase affordable housing supply is to return all spec tax revenue back to the municipalities for the sole purpose of subsidizing the build of affordable housing, but don't think we will see a 'tax and spend' NDP government do anything like that. They just want more revenue for their social programs.
10:24 am
December 17, 2016
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So, in 2006 we purchased a 1,000 sq ft unit in a brand new 4-plex in the James Bay area of Victoria. With 2018 property assessments going up on average 15% over 2017, for strata units, our property taxes are around $3,800 for the year. NEXT year, as "Canadian citizens and permanent residents who do not live in British Columbia," with the Speculation Tax, our tax bill will be between $10,000 - $12,000 for the year.
Needless to say our ownership of the property is under intense review.
10:49 am
October 22, 2015
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Top It Up said
So, in 2006 we purchased a 1,000 sq ft unit in a brand new 4-plex in the James Bay area of Victoria. With 2018 property assessments going up on average 15% over 2017, for strata units, our property taxes are around $3,800 for the year. NEXT year, as "Canadian citizens and permanent residents who do not live in British Columbia," with the Speculation Tax, our tax bill will be between $10,000 - $12,000 for the year.Needless to say our ownership of the property is under intense review.
That is shocking! Yikes!
11:47 am
October 27, 2013
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Indeed. The tax is meant to be punitive. However, there is a huge grey area between truly vacation properties and properties which could be full time housing ownership (or rental) for those 'working stiff families' crowded out of housing options. I don't know how the province could regulate it, but they should be exempting vacation properties for Canadians, while at the same time, punishing those 'taking housing away from those that need full time housing'. There will be lots of unintended consequences and the gov't does not seem to care what collateral damage they cause.
12:00 pm
December 17, 2016
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There are ways "around" the Speculation Tax - the major one being DECLARE British Columbia as the primary residence province - BUT that means falling under COMMUNIST rule and a whole lot of other tax implications / considerations.
Renting the property out ISN'T an option because we or other family members use it 4-6 months of the year - and anyway, I'm not interested in becoming a landlord.
Lots of mulling in our near future.
5:09 pm
December 17, 2016
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Top It Up said
Needless to say our ownership of the property is under intense review.
We, the 4-plex owners, missed this part of the announced Speculation Tax - but we're sleeping better, at least for now -
"[B.C.’s finance minister] Carole James said Monday the government would temporarily grandfather people out of the tax if their second property is in a building where strata bylaws prohibit rentals. The tax exemptions will be temporary because government doesn’t want to incite stratas to pass new rental restriction bylaws to try to skirt the tax, said James."
The 4-plex strata had no rentals in it's by-laws right from the outset BUT we were looking to remove that restriction to allow rentals, if needed to circumvent the tax.
Please write your comments in the forum.