All BC homeowners should now have received their declaration notice in the mail, and you may have questions about how this tax could impact you. It is important to have a real estate professional on your side to guide you through the new tax rules, even if you are not planning to sell anytime soon. Going through the process of buying and selling with our clients, REALTORS® are familiar with the different issues that can arise when you do decide to move.
The B.C government has implemented a speculation tax as a means of curbing the number of empty properties in real estate hot spots including, Vancouver Island, the Fraser Valley, the Capital Regional District, Kelowna, Metro Vancouver and a few other municipalities.
The government advises Canadians that the purpose of the tax is to “target foreign and domestic speculators who own residences in B.C. but don’t pay taxes here.”
There are a number of pros and cons to this tax, and a lot of controversy around how it will benefit BC residents. Homeowners who live in their properties (or rent them out for a minimum three months in 2018 or for a minimum of six months in 2019) will be exempt, but it is important to know the details of other available exemptions, and how the use of your property will affect you financially.
In this series, I will go over the available exemptions in detail so you can identify which situation will apply to you based on your personal circumstances.
Additional exemptions are available for:
- Local governments
- Some non-profit organizations
- Developers working on construction or renovation of their property
- First Nations
- Disabled individuals and couples
- Inherited properties
- Properties valued at less than $150,000.00
- If a person was away and the home was vacant due to work or spousal separation, medical reasons or residential care.
- Condos and apartments in buildings where strata’s ban rentals (for 2018 and 2019 taxes. This will be changing after the strata’s have been given time to change their bylaws.)
For 2018, the tax is levied at 0.5% of a home’s assessed value. For 2019 and the years following, the tax rate will be:
- 2% for foreign owners
- 2% for families where the majority of combined income is earned outside of Canada
- 5% for Canadian Citizens
The majority of British Columbians will be exempt from this tax, but it is important to know that all homeowners must register to claim their exemption prior to March 31st, 2019 otherwise they will automatically pay by default. Those who do not apply, or do not qualify will be sent tax bills due to be paid by July 2, 2019.
If a homeowner accidentally pays the speculation tax and is in fact, exempt, they may receive a rebate within six years.