British Columbia-> Budget 2018
British Columbia Speculation and Vacancy Tax
Note: re 2021 Federal Budget proposal for a national, annual 1% tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused: foreign owners of Vancouver, BC residential real estate that is vacant or underused have to pay 2 of these taxes, as well as a foreign buyer's property purchase tax. This has not significantly cooled the housing market in Vancouver. To participate in a consultation on this proposal, see the September 2021 Video Tax News Life in the Tax Lane video for links. The legislation for the Underused Housing Tax Act is included in Bill C-8, An Act to implement certain provisions of the economic and fiscal update, which passed first reading December 15, 2021.
Note: The speculation and vacancy tax is completely separate from the City of Vancouver Empty Homes Tax. If you own residential property in Vancouver, you must submit a declaration annually to the City to determine if your property is subject to the 1% tax. The due date for the declaration regarding the 2021 vacancy reference period was February 2, 2022. For the City of Vancouver, only one declaration is required per property. The Empty Homes Tax affects unimproved residential (class 1) property as well as properties with homes on them.
The BC speculation and vacancy tax affects residential properties (including vacant land, but not including properties with an assessed value of $150,000 or less) in "specified areas". If your assessment notice says "residential", then you own residential (class 1) property which may be subject to the tax. The specified areas are:
- municipalities within the Capital Regional District;
- municipalities, other than the Village of Lions Bay, within the Metro Vancouver Regional District;
- City of Abbotsford;
- City of
Chilliwack;
- City of
Kelowna;
- City of
Nanaimo;
- City of West
Kelowna;
- District of
Lantzville;
- District of Mission;
- that part of Electoral Area A within the Metro Vancouver Regional District that comprises the University of British Columbia and University Endowment Land as defined in section 1 of the University Endowment Land Act;
- a prescribed area;
The Act goes on to exclude certain areas, including
- various First Nations lands, and
- islands within the above areas that are usually accessible only by air or
water throughout a calendar year.
Speculation and Vacancy Tax Rate
The tax is charged on each owner's share of the assessed value of the residential (class 1) property. If there are 2 joint owners, then each will pay based on 50% of the assessed value. The Act does not consider beneficial ownership, except as it relates to a corporate interest holder or a property registered in the name of a trustee. If there are 2 tenants in common, their share will each be 50% of the assessed value, unless their ownership interest is specified on the title to the property, in the registered agreement for sale or in the registered lease.
The lowest tax rate of 0.5% is applicable to every owner for the 2018 calendar year (tax to be paid in 2019).
Subsequent to 2018:
The lowest tax rate of 0.5% is applicable to owners who are BC residents, specified Canadian Citizens or specified permanent residents of Canada, including corporations in respect of which all of the corporate interest holders are BC residents, specified Canadian citizens or specified permanent residents of Canada. See the definition of corporate interest holder in the Act.
The highest tax rate of 2% is applicable to other owners, and to any owner who fails to file a declaration for the calendar year, to claim an exemption (see Exemptions below).
The tax payable = tax rate x (owner's % interest x assessed value).
Exemptions from the Speculation and Vacancy Tax
To claim an exemption from the tax, each and every owner of residential property in the affected areas must file a declaration form by March 31st of every year. The province is mailing out information to all property owners in the affected areas. The declaration can be filed online, or can be done over the phone. Language translation services are available over the phone.
There are various exemptions from the tax, including for
- principal
residence,
- properties
with tenants,
- strata
accommodation properties (2018 and 2019 only),
-
residential property without a residence (2018 only),
- some daycares,
- properties
under construction or renovation, if specified "building activities"
are started or continued,
- some heritage
properties
Most of the above exemptions have criteria that limit the exemptions, and not all exemptions are listed above. For a complete list of exemptions, see the Act (link at top).
Declaration letters are being mailed by the government from Jan 21, 2019 through mid-Feb 2019. If you own residential property in any of the designated areas and have not received a letter by late February, contact the government, because information from the letter is required to do the declaration - see links at the bottom of this article.
Tax Credit for BC Residents or Eligible Taxpayers
An individual who is a BC resident may reduce the speculation and vacancy tax payable on their residential property by $2,000 x the owner's % interest in the property. If the individual owns more than 1 residential property which is subject to the tax, the maximum tax credit is a total of $2,000 for all properties, not each property.
An "eligible taxpayer" is an owner of a residential property who is subject to the highest tax rate, or who is a specified Canadian Citizen or specified permanent resident of Canada who is subject to the lowest tax rate.
The tax credit for an eligible taxpayer is more complicated, and depends in part on the taxpayer's income earned in the taxation year in BC (BC Income). We won't go into the details here.
Ontario Foreign Buyer Tax
Ontario Non-Resident Speculation Tax (NRST)
BC Speculation and Vacancy Tax Legislation
Bill 45, Budget Measures Implementation (Speculation and Vacancy Tax) Act, 2018 was tabled on October 16, 2018 and received Royal Assent November 27, 2018. The resulting Legislation is:
Speculation and Vacancy Tax Act, and
Speculation and Vacancy Tax Regulation
TaxTips.ca Resources
BC Foreign Buyer Tax (Additional Property Transfer Tax)
Government of BC Resources
When to Expect Your Speculation and Vacancy Tax Letter
How to Declare for Speculation and Vacancy Tax - due March 31st
Tax Tip: Make sure you file a declaration or else you'll be billed even if you're exempt!
Revised: February 11, 2022