Do you need to pay for the vacancy and speculation tax as a homeowner?
As a homeowner, there are many taxes to account for and Vacancy and Speculation Tax is one on the list. It is a provincial tax that applies to homeowners in British Columbia.
Vacancy and speculation tax is not the same tax as the municipal tax, Empty Homes Tax.
What is the Speculation and Vacancy Tax?
The Speculation and Vacancy Tax is a provincial tax applicable to residential property owners in British Columbia. The tax is based on the type of ownership of the residential property.
This tax applies to homeowners who do not live in their homes or do not rent them out. The tax was implemented in 2018 to combat rising housing and rent prices in the province. It aims to turn empty homes into good housing for people living in BC. So it is meant to support local residents.
According to the Government of British Columbia: “Over 99% of British Columbians are exempt from the speculation and vacancy tax.” This means that less than 1% of local residents are affected by the tax.
How does Speculation and Vacancy Tax work?
According to the Government of British Columbia the annual tax is based on the following criteria:
- How property owners use their residential property
- The property owner’s residency status
- Where property owners earn and report their income
There is an annual declaration process that registered owners of residential properties must complete each year. This declaration is due on March 31 every year. Typically, registered property owners receive a declaration letter around January or February. Each owner on the property’s Title must make an individual declaration. This applies even if the other owner is a spouse or relative.
How much is the Speculation and Vacancy Tax rate?
For 2019 and subsequent years, the tax rate is:
- 2% for foreign owners and satellite families
- 0.5% for Canadian citizens or permanent residents of Canada who are not members of a satellite family
Exemptions from the Speculation and Vacancy Tax
So how can you be exempt from paying the Speculation and Vacancy Tax?
Well to start, if your home is your principal residence you will be exempt from this tax.
Also if your property has an assessed value under $150,000 you will be exempt as well.
The exemptions to the tax are grouped into three categories: Individuals, Land under development, and Corporations, trustees and business partners.
Some of the other exemptions include;
- Owners who rent at least 6 months of the year, granted tenancy requirements are met
- Medical absence up to two years
- Care Facility residence due to old age/addiction/mental health etc.
- Spousal Separation for work or medical reasons
- Person with a disability lives in the residence
- Just bought or inherited the property
- Inability to inhabit due to damage or hazardous conditions
- Year of acquisition of home (see conditions)
- Land under development
- Property is principal residence of a corporate interest holder, beneficial owner or partnership interest holder
View the full list of Exemptions of Speculation and Vacancy Tax from the Government of British Columbia.