To prevent housing speculation in British Columbia and help turn vacant homes into rentals in its overheated market, the BC provincial government recently implemented the BC Speculation and Vacancy Tax on residential property located in certain areas of British Columbia.
Where does the British Columbia Speculation and Vacancy Tax Apply?
New for 2018, owners are subject to a tax of 0.5% of the assessed value of the property as of July 1, 2018, with the tax rate rising up to 2% in certain situations in 2019 and future years. Areas impacted by the tax include Victoria and area, Metro Vancouver, Abbotsford, Mission, Chilliwack, Kelowna and West Kelowna, Nanaimo and area. Areas such as Whistler, Penticton and Vernon are not in the affected areas and are not subject to the tax.
Exemptions to the tax include owners that occupy the property as their primary residence and owners that rent the property out for at least three months of the year (for 2018). Six months rental is required for 2019 and future years. The BC government expects that over 99% of British Columbians will be exempt from this tax.
Annual Declaration Required for All British Columbia Residential Property Owners
This week, the BC provincial government announced that all residential property owners in these areas must complete an annual declaration to claim any relevant exemptions to the tax. The letters to request the exemption are being mailed out over the next few weeks and are due on or before March 31, 2019.
Action Item for Owners of British Columbia Residential Property
This exemption requirement is getting picked up in the local media so most are aware of it. However, many out province home owners won’t be aware of this requirement and may not know to look for a letter coming to the property. Failure to file by the March 31st deadline may result in BC assessing the Speculation and Vacancy Tax, requiring a response/appeal from the home owner.
More information can be found here:
British Columbia is mailing out declaration letters to home owners starting in mid-January. If you need assistance in complying with the exemption notice or determining the implication of this tax to your property, please contact us.