As we’re sure most of you are aware, City centres in BC are going through a housing crisis. The prices of many homes are way past most local incomes and the same goes for rental prices. In areas of BC, the vacancy rate is sitting near 0%, which is a huge problem. The idea of speculation has been making it difficult for BC inhabitants to find homes, condos, or even apartments they can afford. This has a huge effect on businesses, communities and most importantly is hurting those of us are looking to rent or buy a home. The speculation tax has been brought in to ensure that people who reside in BC will be able to afford to live in their own province.
What the speculation tax aims to do is push speculators out of the housing market, which will help turn vacant or underutilized properties into homes for people who live and work in BC. The tax aims to increase the amount of available housing in urban centres and will help more locals live where they work.
The tax has been designed to seize foreign and domestic speculators and homeowners who hold vacant properties in urban areas. 99% of BC residents are estimated to be exempt as most do not have a vacant second home in the affected areas.
How Will it Be Implemented?
With a focus on urban centres, the speculation tax will apply to residential properties in BC that are facing a housing affordability crisis. In places where the vacancy rates are extremely low, there are severe affordability challenges. For those who rent, getting to the point of filling out a tenant application is getting much more difficult due to low vacancy and skyrocketing prices.
To see if the speculation tax applies to you as a landlord or tenant, click here. There are exemptions, however, as primary residences of BC are exempt from this tax and beginning in 2019, homes will need to be rented out for at least 6 months of more than 30 days at a time to qualify for this exemption.
Starting in 2019 the tax rates will be:
- 2% for foreign investors and satellite families
- 1% for Canadian citizens and permanent residents who do not live in BC
- 0.5% for BC residents who are Canadian citizens or permanent residents
There will be a credit for BC residents who are Canadian citizens or permanent residents who are not part of a satellite family. If you fall under any of these, you will be eligible for a tax credit that will be applied against the speculation tax. It aims to offset $2,000 in speculation tax payable. If you are a homeowner that has multiples properties, this tax credit will only be applicable to one property. The purpose of this credit is to ensure that BC residents do not pay tax on their second home valued up to $400,000. If your vacant property is worth more than $400,000, the credit ensures that tax is only applied to that value above that amount.
The purpose of this speculation tax is to ensure BC residents are able to afford a home whether they are renting or purchasing, and this tax targets non-residents who own properties that are in designated urban centres and don’t rent them out at last 6 months a year.
For more information on the speculation tax, read the full tax information sheet here. And if you have this new tax all figured out and are looking to rent out your property, contact us right away for help screening your tenants!