How the speculation and vacancy tax is catching YOU off guard?
In BC, the speculation and vacancy tax is relatively new. It aims to deal with the housing crisis in population-dense areas. The tax does not apply to the entire British Columbia, it only applies to specific regions that are affected by the housing crisis. These regions are:
- The Capital Regional District (Victoria, Saanich, etc.)
- The Metro Vancouver Regional District (Vancouver, Surrey, etc.)
- The City of Abbotsford
- The District of Mission
- The City of Chilliwack
- The City of Kelowna
- The City of West Kelowna
- The City of Nanaimo
- The District of Lantzville
Despite aiming at the regions with the highest populations, there are a number of exemptions. In order to avoid the tax, all you need to do is to check your mail for the declaration form. This would inform the government that you’re actually living in your home.
You have until December 31 of each year before the tax applies, but even if you miss the deadline, you can still contact the government to prove that you were living in the home that year.
The obvious exemption is that if you’re living in your home, then it’s not vacant!
Below are some of the most common exemptions.
If you buy a home for yourself with your parent also on title, but your parent lives elsewhere, then you can claim an exemption for yourself as the principal resident. Your parents can claim a tenancy exemption since they’re letting a family member live in the home that they partially own.
Occupied by a Tenant
The owner of the property can avoid vacancy tax if the property is occupied by a tenant for at least 6 months of the calendar year. It doesn’t have to be 6 months with one tenant, but each tenant must have rented the propety for at least one month (otherwise most Airbnbs would be exempted).
This exemption also applies to property with more than one building on it. If you have a vacation home with a guest house, the entire property would be exempted given that you rent out one of the buildings for at least 6 months of the year.
Just Acquired The Property
If you just bought or received a property and paid the property transfer tax (or were exempted from the tax), then you will also be exempted from the vacancy tax for that calendar year. The following year however, you will have to claim a different exemption to the vacancy tax.
For a full list of other exemptions, including newly built homes, charities, and veterans, check out this website from the BC government.
What If I’m Not Eligible for an Exemption?
The tax rate depends on if you’re a foreign owner or a Canadian citizen. Foreign owners and satellite families pay 2% on the property’s assessed value, while Canadian citizens who aren’t part of satellite families pay 0.5%.
A satellite family is a household that declares less than 50% of its total combined income on Canadian income tax returns. It’s possible for Canadian citizens to be in a satellite family, which means they would have to pay a higher vacancy tax rate.
Not Sure If You Qualify for an Exemption?
Give BC Property Transfer Tax Office a call at (250) 387-0555.
Want to discuss your real estate transaction?
Give us a call at 604-559-2529 or email us at [email protected].