Everything You Need To Know About the Provincial Government Tax Changes
Speculation TaxAfter hearing from cottage owners around the province, Finance Minister Carole James sent her government's new speculation tax, announced in Budget 2018 and slated to come into effect in September, back to the drawing board.
On March 26, 2018 she announced changes saying the new tax will now specifically target only speculators - those who "treat our housing market like a stock market, leaving homes vacant and driving up prices,” said Minister James.
Under this latest version of the speculation tax, more than 99 per cent of British Columbians and other Canadians who own vacation cabins and cottages on lakes and Gulf Islands won’t pay the tax, according to Minister James.
Geographic areasOnce implemented, the tax will now apply to:
- Metro Vancouver;
- The Capital Regional District (excluding the Gulf Islands and Juan de Fuca);
- Kelowna and West Kelowna;
- Nanaimo-Lantzville; and
- Abbotsford, Chilliwack and Mission.
RatesIn 2018, the tax rate for all properties subject to the tax is 0.5% of the property value.
In 2019 and subsequent years, the tax rates will be:
- 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).
Exemptions/tax creditOwners of primary residences, and property that is a qualifying long-term rental, are exempt from the tax.
A long-term rental is considered a property that’s rented out for at least six months out of the calendar year in increments of at least 30 days. In 2018, as part of the transitionary phase, a long-term rental is considered a property rented out for three months of that year.
British Columbians with vacant second homes will be eligible for a non-refundable tax credit that’s immediately applied against the speculation tax.
This tax credit will offset a total of $2,000 in speculation tax payable and ensures British Columbians do not pay tax on a second home valued up to $400,000.
Special case exemptionsThese include:
- 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.