Do you know what Speculation Tax is?
First of all speculation tax is another tax added to all other taxes already owed by home owners. The purpose of this tax is to encourage homeowners of empty homes to list their homes for sale, find renters or be subject to a penalty (tax!). This tax is about 0.5% of your assessed home value. For a $1million home, this means an extra $5,000. The Ministry of Finance said letters outlining the first speculation tax fees and exemption processes will begin arriving at all homes in Greater Victoria, Nanaimo, Kelowna and Metro Vancouver (excluding Bowen Island and Lions Bay, but including Abbotsford, Mission and Chilliwack) starting this week.
British Columbians with second homes who aren’t exempt will still get a credit intended to cover the tax on the assessed value up to $400,000, with the remaining value of the property then taxed at the full rate.
All homeowners looking to be exempt from speculation tax MUST apply before March 31. This tax applies to all homeowners, whether you are a speculator or not. Those who don’t apply, or qualify, will be sent tax bills due to be paid by July 2. Because the tax is retroactive, the first letters will actually be for taxes incurred in the 2018 calendar year — before the tax rules were even finalized.
This is definitely a backwards way to approach dealing with a misguided tax, however here we are. People who pay mistakenly can get a rebate within six years, according to the ministry.
You will qualify for the tax exemption if a few requirements are met:
It is your principal residence
You rent it at least six months of the year (only three months is required in 2018)
You are disabled
The property was just inherited
The property is valued under $150,000
A person was away and it was vacant due to medical reasons, residential care, work or spousal separation
For further information about taxes, home assessments and more, contact Top Vancouver Realtor Leo Wilk.