In the Fall of 2018, the BC Provincial Government will introduce a new speculation tax on residential property. This tax will target foreign and domestic speculators who pay little or no income tax in BC as well as satellite families (families who pay little income tax in BC and have high worldwide income). The BC Speculation Tax will target specific geographical areas and the BC government believes most primary residents and long-term rentals will be generally exempt. The government is hoping this speculation tax will relieve the pressure foreign demand and capital is putting on BC’s housing stock. As a result, the government hopes to make more housing available to BC residents, whether to rent or purchase.
Geographical Areas: Vancouver to Kelowna
The speculation tax will target housing markets the government has deemed hardest hit by the crisis. The Vancouver Regional District (Excluding Bowen Island and Electoral Area A), the Capital Regional District (excluding the gulf islands and Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and mission will all be affected by the new tax rate.
Real Estate Exemptions
The government feels over 99% of residents will be exempt from the new tax because the majority of homes in the province are occupied by the owners or are long-term rentals.
Homeowners who don’t live in BC and satellite families will be subject to the tax unless they are renting out their property. If a property owner doesn’t reside in BC and wishes to avoid the tax, they may rent their property out for at least 6 months of the year.
The rate will be 0.5% of the taxable assessed value for the 2018 tax year and will increase to 2% for subsequent years.
Foreign investors and satellite families will be taxed a 2% tax rate according to the BC Government. Canadian citizens and permanent residents who do not live in BC will be taxed at 1%, and British Columbia residents who are Canadian citizens or permanent residents (and not members of a satellite family) will continue to be taxed at 0.5%.
The BC Government hopes to introduce the Speculation Tax in the fall of 2018. This tax could have significant consequences for those who own more than one property in British Columbia.