Rumour has it – from credible sources – that Finance Minister Carole James may be thinking of changing a speculation tax on residential property, slated to be introduced in September 2018.
The proposed annual property tax was originally presented on February 20 in Budget 2018 as part of the NDP government’s 30-point housing plan, targeting both foreign and domestic home owners who don’t pay income tax in BC, including owners who leave their homes vacant.
The tax was meant to build on the previous Liberal government’s 15 per cent tax on Metro Vancouver homes bought by foreigners, introduced in 2016.
Budget 2018 raised this tax to 20 per cent and expanded it to homes in the Fraser Valley, the Capital Regional District, the Nanaimo Regional District, Kelowna and West Kelowna.
The original goal of the tax was to target satellite families – households with high worldwide income that pay little income tax in BC.
But, captured in the tax were BC residents and other Canadians with cabins and cottages, some passed down through generations.
The tax bill on a modest $200,000 property would be $10,000 a year under the proposed tax rate of $5 per $1,000 of assessed value in 2018, jumping to $20 per $1,000 of assessed value in 2019.
Organized real estate responds
Members have been sharing stories with us about their clients who can’t afford the tax. This tax particularly affects those least able to pay for it – ordinary working British Columbians and seniors who may have owned their second homes for decades.
We’ve passed this information along to the BC Real Estate Association (BCREA).
BCREA has been working with stakeholders and with Minister James and her staff to get answers and to provide input before the legislation is introduced this fall.
BCREA is recommending:
- Home owners who pay income tax in Canada should be exempt from the speculation tax, regardless of how many homes they own.
- Home owners should not be taxed twice. The City of Vancouver’s Empty Homes Tax and the proposed speculation tax should not both apply to the same property.
- Development properties should be exempt from the tax. These properties are often bought years before they are developed, and the proposed tax would add costs that would be passed on to buyers. Builders and developers could sign declarations regarding their intentions to ensure such an exemption is used properly.
- The government create incentives for home owners to make their homes available as long‐term rentals, rather than penalizing owners who do not rent their properties.
BCREA’s full list of recommendations, concerns and questions about the proposed speculation tax is available here.
There are indications that Finance Minister James is listening, according to Harriet Permut, manager of government relations.
“We are working on details now, including all of the issues people have been raising,” the Minister told the Vancouver Sun.”
We’ll keep you posted on our progress.