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Landmark tax successfully captures speculators, helps fund homes for people

Landmark tax successfully captures speculators, helps fund homes for people

July 11, 2019 at 10:06 am  BC, News, Politics

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Finance

British Columbia News

Landmark tax successfully captures speculators, helps fund homes for people

https://news.gov.bc.ca/20227

Backgrounders

The speculation and vacancy tax is a key measure in tackling the housing crisis in major urban centres in British Columbia, where home prices and rents have skyrocketed out of reach for many British Columbians.

The speculation and vacancy tax is a part of government’s 30-point plan to make housing more affordable for people in the province.

Tax structure

  • In 2018, the tax rate for all properties subject to the tax is 0.5% of the total property value.
  • For 2019 and subsequent years, the tax rate is:
    • 2% for foreign owners and satellite families.
    • 0.5% for Canadian citizens or permanent residents of Canada who are not members of a satellite family.
  • The speculation and vacancy tax applies based on ownership as of Dec. 31 each year.
  • A speculation and vacancy tax year is the same as a calendar year. Tax levied on Dec. 31 is due the following July. For example, for a property owned as of Dec. 31, 2018, the 2018 tax rate of 0.5% applies and the tax is due on July 2, 2019.

Revenue

  • Revenue from the tax was $115 million for the 2018-19 fiscal year, higher than estimated in Budget 2019 ($87 million), as a result two factors:
    • Public Accounts 2018-19 requires for this last fiscal year that the 15 months of revenue from Jan. 1, 2018, to March 31, 2019, be reported during the 12 month fiscal year. For the 2019-20 fiscal year and subsequent years, revenues for SVT will be reported on a 12 month basis.
    • Higher than expected property values of homes captured by the SVT.
  • The average assessed value of properties subject to the tax is $1.62 million.
  • The average assessed value of properties exempt from the tax in the taxable areas is $1.11 million.

Background

  • The speculation and vacancy tax applies to residential property in British Columbia’s largest urban centres facing the housing affordability crisis. These are regions with low vacancy rates that are facing severe affordability challenges in which home prices drastically exceed local incomes.
  • The following areas are subject to the speculation and vacancy tax:
    • Municipalities within the Capital Regional District;
    • Municipalities within Metro Vancouver –
      • excluding Bowen Island, the Village of Lions Bay and Electoral Area A, but including the University of British Columbia and the University Endowment Lands;
    • The City of Abbotsford;
    • The City of Chilliwack;
    • The District of Mission;
    • The City of Kelowna;
    • The City of West Kelowna;
    • The City of Nanaimo;
    • The District of Lantzville;
    • Islands are not part of the taxable region unless they are accessible by bridge; and
    • Reserve lands, treaty lands and lands of a self-governing Indigenous Nation are not part of the taxable region.
  • The tax is designed to capture foreign and domestic speculators, satellite families who live in B.C. but do not pay their share of income taxes, as well as homeowners who hold vacant property in designated urban centres.

Exemptions

For a full list of exemptions from the speculation and vacancy tax, visit:
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax/exemptions-speculation-and-vacancy-tax/individuals

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