Mortgage Blog

BC Speculation and Vacancy Tax - Don't Forget to Make Your Declaration!

February 12, 2019 | Posted by: Kelleway Mortgage Architects

March 31, 2019, is the deadline to declare your property ownership status for the new annual Speculation and Vacancy Tax in BC (BC SpecTax).  If you owe speculation and vacancy tax, your payment is due by July 2, 2019.

The taxman’s expectation is that 99% of British Columbians will be exempt from this tax but you still need to DECLARE.  If you do not declare, you may be taxed at 0.5% of your property’s assessed value.

You will need to:

Go to gov.bc.ca/spectax online or call 1 833 554 2323 between 8 am and 8 pm.

Enter your declaration code and letter ID that you should now have received in the mail.

Enter your property address and your Social Insurance Number.

Submit a separate declaration for each owner if your property has more than one owner, even if that is your spouse.

Those who can expect to pay the tax include foreign owners and satellite families.  The tax is also meant to encourage owners of empty properties in urban areas to put those properties back into the housing market by renting or selling them.  This new BC SpecTax is linked to the status of the property owner.  And, it is in ADDITION TO the existing Vancouver Empty Homes Tax that follows the property title.   Overall, the intention of the new BC taxation is to fairly have all property owners contribute to BC’s tax system.

The designated taxable regions in BC affected by this tax are:

Metro Vancouver Regional District

including all municipalities, UBC and the University Endowment Lands

Excluding Bowen Island, Village of Lions Bay and Electoral Area A

Capital Regional District

including all municipalities

excluding Salt Spring Island, Juan de Fuca Electoral Area, and the Southern Gulf Islands

The City of Abbotsford

The District of Mission

The City of Chilliwack

The City of Kelowna

The City of West Kelowna

The City of Nanaimo

The District of Lantzville

Of note is that the BC SpecTax follows the person (i.e., property owner), not the property per se.  The tax rate differs according to the person’s tax residency, Canadian citizenship, permanent Canadian residency, or if a member of a satellite family (i.e., based upon the location where 50% or more of the total combined household income is earned).  Depending upon how the tax rate is applied, the property owners could pay from 0% to 2% of their tax assessed property value each year.

If you are required to pay this tax, check if you are allowed a tax credit of up to $2,000 on a secondary property or on 20% of your BC income to offset the speculation tax.

For spousal partners, it matters whether both live in the house on the assessed property.  Spouses cannot claim two different principal residence exemptions unless they are living apart for work, medical reasons, marital separation or divorce.  For work reasons, the distance to qualify for two principal residences means that one property needs to be at least 100 km closer to the workplace than the distance between the other principal residence and the workplace or if one is on Vancouver Island and the other is not.

There are also some exemptions for newly bought or inherited property so it is wise to check with your conveyancer or lawyer on how the tax may be applied.

If the owner-occupier moves from the tax assessed property into a residential care facility, that facility must offer services such as daily meals, housekeeping or nursing care for the person to be eligible to apply for a two-year exemption from the new tax. 

Additional exemptions are available to owners who have occupants with disabilities living on the taxed assessed property.  Other exemptions may apply to situations involving incarceration, tenancy, strata rental restrictions, death of the owner, changed habitable condition (e.g., due to fire, flood or other damage), property held in trust for a minor, assessed value under $150,000, or if the land is under development or extensive renovations.

The BC SpecTax is new.  Therefore, we expect there will be revisions over time as it is implemented.  According to the government pamphlet, the revenue raised by the tax will go to supporting affordable housing as one part of a 30-point housing plan being developed for the province of British Columbia.  For more details, go to gov.bc.ca/spectax

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