B.C. just made major changes to its speculation tax

By: Jessica Mach on March 27, 2018

The B.C government has amended the speculation tax it proposed in February so that fewer of the province’s residents will have to pay the tax.

First introduced as part of the NDP government’s massive 30-point housing plan, the tax originally meant that homeowners would have to pay an additional 2% tax if their properties were found to be unoccupied. In real terms, it works out to an extra $30,000 a year on a $1.5-million home.

On Monday, the province announced that the tax would only apply to foreign homeowners starting in 2019.

B.C. residents with vacant properties will only pay a 0.5% tax on their home's assessed value. Out-of-province Canadians who own property in B.C. will only pay a 1% tax.

Meanwhile, B.C. residents with second homes in the province (for example, vacation homes that they only visit a handful of times a year) worth less than $400,000 will be eligible for a $2,000, non-refundable tax credit that will directly offset the speculation tax.

Homeowners who are undergoing medical or supportive care, or are occasionally absent because they have to travel for work, or are deceased, won’t be subject to the speculation tax at all.

The speculation tax targets vacant homes across several regions of B.C., which has prompted some critics to characterize it as a province-wide version of the City of Vancouver’s empty homes tax — another local measure that aims to tackle the city’s affordability crisis by penalizing speculative homebuyers. Vancouver residents were required to declare their homes either empty or not empty by early March, and most of the houses that failed to meet the deadline were in the city’s trendiest — and most expensive — neighbourhoods.

While the new speculation tax was initially set to apply across the province, the changes announced Monday included a more refined list of regions where the tax would be active. These include Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission.

Many of the most vocal critics were B.C. residents with second homes, residents who had to be away from their homes for long stretches of time for work, and residents who live in rural areas. Their homes, they argued, were not purchased for speculation purposes and were not located in the province's more exclusive enclaves, and therefore were not directly impacting the affordability crisis.