2019 Brings New BC Speculation Tax
The BC NDP Party campaigned on making housing affordable for local British Columbians. Finance Minister, Caroline James, outlined their 30-point plan to tackling housing affordability. This plan calls for new regulations and laws, including the recently added BC Speculation Tax. Let’s review the changes implemented thus far.
Property Transfer Tax Review
When a residential property changes ownership, there is a property transfer tax involved. The tax is tiered, meaning higher assessed properties will have a larger tax. Let’s review:
- Applies to Residential Property
- Post-February 21st, 2018:
- – 1% on the first $200,000 of fair-market value (FMV)
- – 2% on the portion of FMV over $200,000 up to $2 million
- – 3% on the portion of FMV over $2 million up to $3 million
- – 5% on the portion of FMV over $3 million
Foreign Buyer Tax Review
The Foreign Buyers Tax was introduced to ensure people residing outside of Canada pay their fair share of taxes.
- Increased from 15% to 20% of the purchase price
- Regional Tax only applies in
- – Capital Regional District
- – Fraser Valley Regional District
- – Regional District of Central Okanagan
- – Regional District of Nanaimo
- – Metro Vancouver
- FBT Applies if the Buyer is:
- – not a Canadian Citizen or Permanent Resident
- – A Foreign Corporation
- – A taxable Trustee
BC Speculation & Vacancy Tax
The new Legislature is called the BC Speculation and Vacancy Tax Act. The tax is designed to target Foreign and Domestic speculators who own residences in BC but don’t pay taxes here. It also aims to turn empty homes into good housing for people while using all funds raised to support affordable housing initiatives.
- Regional Tax That Includes:
- Metro Vancouver
- Capital Regional District (Victoria)
- Kelowna – West Kelowna
- Nanaimo – Lantzville
- Abbotsford, Chilliwack, Mission
- Doesn’t apply to Bowen Island, Gulf Islands, Juan de Fuca, Protection Island, and most Electorial Area A Islands
- Tax Rates Are:
- 2 % of assessed property value for Foreign owners and satellite families
- 0.5 % for British Columbians and other Canadian Citizens or Permanent Residents who are not members of a satellite family
- Keep In Mind:
- Separate from Empty Homes Tax in the City of Vancouver – tax is in addition to Provincial Tax
- Declarations for Speculation and Vacancy Tax need to be completed each year by each person on the title of the property
Exemptions To The BC Speculation Tax
All owners of residential property in the designated taxable regions of BC must complete an annual declaration. Over 995 of British Columbians are estimated to be exempt from this tax.
- You Are Exempt From the BC Speculation Tax if:
- Home is your Primary Residence (except satellite families)
- Rentals: Must be rented 6 months of the year
- Special Circumstances: medical care, hospital supportive housing, temporarily absent for work purposes, administration/probate process
- $2,000 Tax Credit on Properties $400K or less. Tax only payable on assessed values over $400K (only BC residents who are PR or Citizens, not satellite families)
How To Exempt Yourself
To claim your exemption, you must register your property by March 31st, 2019. You can do this over the phone or online. You should have been mailed a declaration form mid-February 2019. You will need the info on this form to complete your declaration.
If the property has more than one owner, including spouses, each owner must file a separate declaration.