Do I Need to Pay the Speculation and Vacancy Tax?
The purpose of this article is to provide a high-level summary on how the new tax will be implemented and how it can possibly affect you. I am many things in life. Two things I am not; a lawyer or an accountant. In no way should this be interpreted as formal legal or accounting advice, and I would be more than happy to connect you to professionals in either of these fields should you require further clarity.
As you’re likely aware, as part of the BC NDP Government’s housing affordability initiatives, a new tax has been introduced with the aim of accomplishing several things:
* Target foreign and domestic speculators who own residences in BC but don’t pay taxes here
* Motivate owners of vacant properties to add them to the rental stock
* Raise revenue that will directly support affordable housing
On a positive note, the vast majority of you will not be affected by this tax provided you make the necessary Declaration. If any properties you own are in the affected area, and they are either your Primary Residence or you have them tenanted for a minimum of 3 months in 2018 (increasing to 6 months for 2019), you are likely exempt. Short-term rentals such as Airbnb are not considered to be tenancies. Note the affected areas below (for an exhaustive list of regions visit https://bit.ly/2RHKOvg):
* Metro Vancouver (excluding Lions Bay and Bowen Island)
* Capital Regional District (Victoria and its surrounding municipalities)
* City of Abbotsford
* City of Mission
* City of Chilliwack
* City of Kelowna and West Kelowna
* District of Lantzville (immediately North of Nanaimo)
It’s important to mention there’s a whole host of other possible exemptions, and the government has stated this tax is being imposed with the intent of it not applying to 99% of British Columbians. Here’s a short list of some of the more common ones, and the complete list can be found here (https://bit.ly/2O8VdsZ):
* Property worth less than $150,000 (based on assessed value)
* No residence on the property (bare land, an unlivable house, an in-construction house)
* Property is on First Nations Land (ie. Leasehold such as Ravenswood)
* Strata Bylaws do not permit rentals
The BC Government will charge you the Speculation Tax unless you make a declaration otherwise. If applied, the tax will be 0.5% of your 2018 assessed value for everyone. In 2019, this will shift to 0.5% of your 2019 assessed value for BC Residents and Canadian Citizens, and 2% for Foreign Nationals. The payment will be due by the first business day in July.
How to make your declaration:
In the next couple of weeks, declaration letters will be mailed to properties in the affected regions. All owners (people on Title) must make the declaration. If you and your partner are both on title, that means two declarations. Your letter will contain a Declaration Code and a Letter ID. You’ll need both of these, as well as your SIN number to complete the Declaration. Please visit the link below to make your Declaration before March 31st, 2019. https://www.etax.gov.bc.ca/SVT/_/
Please don’t hesitate to contact me directly with any further questions or concerns,