If you’re a homeowner within the Vancouver metropolitan region, you’re likely already familiar with both the Empty Homes Tax (applicable only to Vancouver) as well as BC’s Speculation and Vacancy Tax (Province-wide), both designed to offset some of the strain placed on the housing market by foreign investors and those who own property within the region but live elsewhere for the majority of the year. What you may not be aware of, is the recent changes to the Speculation and Vacancy Tax that came into effect as of December 31, 2019. Below are some key updates to be aware of, both for prospective and current homeowners.
The Rate Has Increased
Effective as of December 31, 2019, the tax has increased from 0.5% to 2% for land owned by foreign owners or satellite families. As with practices in 2018, taxes levied in December of 2019 are due in July of 2020. Those who are not eligible for exemption may qualify for a tax credit per the stipulations below:
BC Owners: If you own multiple properties within BC and are being taxed on a secondary property, you may be edible for a tax credit of up to $2,000 (per owner, per property, per year).
Foreign Owners and Satellite Families: Foreign owners and satellite families may claim a tax credit equal to 20% of their BC income to reduce the 2% speculation and vacancy tax owed. Note that this tax credit cannot reduce the tax rate below the rate for an equivalent BC resident (zero on a principal residence or 0.5% on other properties).
Other Canadians – Non-BC resident Canadians will be eligible for a tax credit based on that income claimed in BC. The tax credit cannot reduce the tax rate below the tax rate for an equivalent BC resident.
There Are New Exemptions:
New For 2020 are exemptions for property owners who are members of the Canadian Armed Forces while in active service, as well as their spouses. In addition, there is an exemption for people who own properties only accessible by water. Note, this exemption for strata properties in buildings where rentals are banned will be phased out by Dec. 31, 2021.