Vida Glaser B.Sc.

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2018 Budget Tax Changes Provide Opportunities for Buyers

British Columbia Speculation Tax provides investment opportunites and homes for BC residents.  With the speculation tax being effective January 2018, we are already seeing more properties coming on the market after the first announcement in February 2018.  Investors with vacant properties are beginning to sell. The good news is for you; more great properties to buy.  Long term rentals are exempt fromthe tax, as are primary residences.  New housing projects will also provide opportunites for you to own a home in Beautiful British Columbia. Contact me for exempt map locations, where investment or second home opportunites are currently allowed.  Details from BC website below.


Implementation details:

Focus on urban centres:

The speculation 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 tax applies in the Metro Vancouver Regional District (excluding Bowen Island and Electoral Area A, except the part of the electoral area that is the UBC and University Endowment Lands), the Capital Regional District (excluding the Gulf Islands and (Juan de Fuca), Kelowna-West Kelowna, Nanaimo-Lantzville (excluding Protection Island), Abbotsford, Chilliwack, and Mission. Most islands are excluded.

 

Exemptions:
Primary residences of British Columbians are exempt from the tax.

Properties that are used as qualifying long-term rentals are exempt from the tax. Homes will need to be rented out for at least three months to qualify for an exemption in 2018. Starting in 2019, homes will need to be rented out for at least six months, in increments of 30 days or more, to qualify for an exemption.

Over 99% of British Columbians will be exempt, because the vast majority of homes owned by British Columbians in the province’s urban centres will either be owner- occupied or will be rented long-term.

Rate design:

In 2018, the tax rate for all properties subject to the tax is 0.5% on the property value.

In 2019 and subsequent years, the tax rates will be as follows:

  • 2% for foreign investors and satellite families;

  • 1% for Canadian citizens and permanent residents who do not live in British

    Columbia; and

  • 0.5% for British Columbians who are Canadian citizens or permanent residents

    (and not members of a satellite family). Credit design:

    British Columbians who are Canadian citizens or permanent residents, and not part of a satellite family, will be eligible for a tax credit that is immediately applied against the speculation tax. This credit will offset a total of $2,000 in speculation tax payable. For homeowners with multiple properties, the tax credit will only apply to one property.

    This tax credit will ensure that British Columbians do not pay tax on a second home valued up to $400,000. For more expensive vacant properties, the credit ensures that tax only applies to the value of the property above $400,000.

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Who doesn’t pay the tax:

The vast majority of British Columbians:

Over 99% of British Columbians are estimated to be exempt from the speculation tax because they own a home and live in it, rent a home, have a second property that is outside of a designated urban centre, have a second property that is valued below $400,000 or have multiple urban properties that are rented out long-term.

People whose homes and cottages are outside the designated urban centres:

The speculation tax uses a targeted approach. It is purposefully designed to help bring housing stock onto the market in B.C.’s urban centres hit hardest by the housing crisis. People with homes and cottages outside the designated area do not pay the speculation tax.

Homeowners with properties in designated urban centres, but who rent them out long-term:

People who hold properties in designated urban centres will also be exempt from the tax if they rent the properties out at least six months a year.

Those eligible for special exemptions:
There will be exemptions to accommodate special circumstances, including:

  • The owner or tenant is undergoing medical care or residing in a hospital, long- term care or a supportive-care facility

  • The owner or tenant is temporarily absent for work purposes

  • The registered owner is deceased and the estate is in the process of being

    administered 

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