Speculation Tax Legislation

Last week the province introduced the Speculation and Vacancy Tax Act, followed by an announcement of further changes through agreement between the Green caucus and NDP.  The amended legislation will see a 0.5% tax rate applied to all Canadians owning properties in designated regions, and targets revenues towards affordable housing in those regions.

Tax Structure and Application

The Speculation and Vacancy Tax will apply to properties that are not lived in as a principal residence or rented out for at least 3 months of the year in 2018, or 6 months per year in subsequent years.  For 2018, the tax will be levied at 0.5% of the property’s assessed value for all properties subject to the tax.  For 2019 and subsequent years, the tax will be levied at:

  • 2% for foreign investors and satellite families, which are defined as individuals or spousal units for whom the majority of total worldwide income for the year is not reported on a Canadian tax return; and,
  • 0.5% for Canadian citizens and permanent residents who are not members of a satellite family.

The tax will apply to residential properties in: municipalities within the Capital Regional District and Metro Vancouver, excluding Bowen Island, Lions Bay and Electoral area A, but including the University of British Columbia and Endowment Lands; Abbotsford, Chilliwack, Mission, Kelowna, West Kelowna, Nanaimo and Lantzville.

The tax will not apply to residential properties owned by a number of bodies including municipalities, Indigenous Nations, and regional districts.

Exemptions

Exemptions are provided for British Columbians’ principal residences, rented properties and special circumstances including major renovations and difficult life events. The legislation also includes exemptions for owners of property that is under construction or substantial renovation, as long as they are carrying out eligible building activity. Both the Urban Development Institute and BC Real Estate Association have issued statements of support for this exemption.

Green Caucus Amendments

In addition to seeing a reduction of the tax rate for out of province Canadians from 1% to 0.5%, amendments to be introduced by the Green caucus will create an annual meeting between the Minister of Finance and mayors in affected areas to review the tax and relevant performance measures. The amendments will also target revenues raised by the tax towards Nanaimo-Lantzville, the Capital Regional District, Metro Vancouver, the Fraser Valley and Kelowna-West Kelowna.

Consistency with UBCM Policy

At the 2018 Convention, members endorsed resolution 2018-A3 as amended to request that the province modify the speculation tax to empower local governments to levy a tax on vacant residential properties at their discretion, and to require that local governments that choose to do so invest revenues in non-market housing. The speculation tax as amended addresses these concerns in part, by dedicating funds towards affordable housing in communities where the tax is levied.

UBCM policy more broadly supports measures to address speculative demand including the holding of properties vacant for speculative purposes. UBCM will continue to track this issue and work with provincial officials to advocate based on the positions brought forward by our membership.

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