In case you haven’t heard already, British Columbia’s Finance minister Carole James of the NDP dropped bombs a few weeks ago during the budget announcement. A new “Speculation Tax” has been proposed and will be introduced later this year. What is the BC speculation tax you may ask? How does the BC Speculation tax apply to homeownership in British Columbia? Thoughtlessly, that’s how. It’s as if they just came up with this tax “with the best intentions” but not thinking for more than 45 seconds on the topic.
No, it's not just Foreign & Out-of-Province "Speculators"...
What is the BC Speculation Tax?
What you Need to Know:
What the heck is this tax for exactly?
As it lays now, any property that falls under the reign of the speculation tax will be forced to pay a fee equal to 0.5% of the home’s 2018’s Assessed value, and 2% of the assessed value for 2019 and the years thereafter. Only principal residences and long-term rental properties are exempt from this bogus “speculators” cash grab by the Province. The area of which the tax applies is to are homes in Metro Vancouver, the Fraser Valley, the Capital and Nanaimo Regional Districts, Kelowna and West Kelowna.
Who does it apply to exactly? Am I a speculator?
Now, who does this tax apply to? No, it’s not just Foreigners and Out of Province home owners. It’s everybody, even British Columbians. When it was originally announced, the Speculation tax seemed to be targeted towards Foreigners and Domestic “speculators” who do not reside in British Columbia but own property here which sits vacant or empty the majority of the year. These property owners have apparently removed these homes from BC’s “long term housing stock”, meaning homes that are not available to provide a home to the many needing rentals or those seeking to purchase a home in British Columbia
BC Residents Aren't Safe After-all...
Originally, if you were a British Columbian resident and paid income taxes in British Columbia you were exempt from this Speculators Tax – when it was announced – no matter how many properties you own. Unfortunately, that is not the case. The official Speculator Tax schedule has been released and is available here. The tax states that if you own more than 1 property, and and if any of those additional properties are not used as long-term rentals…they will be taxed. The only exemption is a credit towards the amount of Speculation Tax you have to pay which is based upon your income tax. So what if you commute regularly between two cities? What if you use both homes equally? That is the question.
The only problem with this is that it means those who are high earners will be required to pay less tax. Almost exactly the opposite of what the NDP stands for and promotes on a regular basis. What about the senior citizens and veterans who have a vacation property in Kelowna or elsewhere where the tax applies? Let’s say your vacation cabin is assessed at $500,000 — many on a fixed income cannot pay an additional $10,000 a year (for example) to pay for taxes on a property they purchased and paid off 40 years ago. You’d basically be paying your taxes with all of your CPP cheques.
I'm sure they meant well, but...
I get it. There’s a lot of speculation about the speculation of BC home-ownership in general. Foreign ownership is claimed to account for 5% of all properties purchased in BC, however I’ll attest to that and say it’s greater than you think. I can’t count how many times have I seen on title that a foreign national “student” is the sole owner of a $2.7 Million home in Uplands, or a corporation ID number is the owner of a vacant vacation rental that is being marketed as “never being lived in.” These real speculators have their way of purchasing property without appearing as a foreigner. First hand experience is telling me that foreign ownership and out of province speculation is greater than is currently reported. However, how this speculation tax applies now is incredibly ludicrous as it does not target these “speculators” but everyone in British Columbia and Canada. This income tax credit for BC residents to use against the Spec Tax should be so large that it should cover at least 95% of the annual tax, as far as I’m concerned. Just because you own two properties does not make you a speculator or automatically classify you as a wealthy person.
Are you affected? Voice your opinion!
How does this tax benefit British Columbians if British Columbian residents are also being targeted? The NDP claim that they want to stop our housing market from being treated like the stock market. Fair enough. But to target it’s own residents is absolute BS if you ask me. If you agree, I strongly urge you to visit https://www.change.org/p/british-columbia-government-stop-bc-s-speculation-tax to cast your vote in the pile with the rest of the $7,750+ (at time of writing) petitioners who agree with me, and the majority of homeowners.