B.C. government exempting vacation homes from speculation tax

Mar 26, 2018 | 3:31 PM

VICTORIA — The B.C. government will be exempting vacation homes from the speculation tax that comes into effect this year. Finance Minister Carole James says she has heard the concerns of British Columbians and has decided to exempt homes in remote areas and that are on smaller islands in and around the Capital Regional District.

“Ninety nine per cent of British Columbians will not pay the tax,” said James. “The speculation tax focuses on people who are treating our housing market like a stock market. So people in smaller communities, those with cottages at the lake or on the islands, will not pay this tax.”

“If there was one issue that has dominated the conversations that I, our government and all British Columbians have been having it is the issue of housing of affordability. It’s a crisis for British Columbians.”

The government announced on Monday that it will change the rate of the tax. Those living outside of Canada and not paying taxes here will pay two per cent on the assessed value of their home starting in 2019 if the property remains empty. Canadians that do not live in British Columbia will pay a tax of one per cent starting next year. British Columbians that own multiple homes, and keep them empty, will pay 0.5 per cent tax.

There will be exemptions for those who own properties in buildings that do not allow rentals.

“We are working on the specifics at temporarily grandfathering in those who live in stratas that refuse to allow rentals because, again, we recognize that there are some exemptions where people are not able to rent out their properties,” said James.

The tax will apply to Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission. Nanaimo and Kelowna have asked the provincial government to be exempt from the tax.

James says those exemptions will not be granted.

“We have focused the geographic areas so this tax only applies in urban housing markets hardest hit by this crisis,” said James. “With so many people desperate to find good homes in these urban areas, we need to take every step we can to free up and create more housing opportunities.”

Starting this year the tax will be assessed at 0.5 per cent of a vacant property’s assessed value, before climbing in 2019. The province is projecting it could bring in $200 million annually starting next year.

James says her government is still working on the legislation that must be passed before the tax comes into effect. That legislation is expected to be tabled in the B.C. Legislature in the fall.

The promise was that British Columbians who pay tax in the province would not be affected by the tax on their principal residence. The criticism has come when it comes to secondary residences, including vacation homes that are not rented out the entire year.