The B.C. government’s speculation and vacancy tax is moving into full effect this year, with $185 million expected to be collected for 2019 as the rate increases for foreign owners in urban areas.
Finance Minister Carole James met with mayors in the effected regions Thursday, to hear their concerns about the impact of the tax on part-time residents and home construction. Going into the meeting, James said the data collected so far indicate that the tax is working as intended, contributing to a softening of home prices in Metro Vancouver and other urban regions.
Ministry data released Thursday do not indicate if the tax has had any effect on rental vacancy rates, the main objective of applying the tax.
The tax applies to secondary homes vacant for six months of the year or more in the designated cities of Abbotsford, Chilliwack, Mission, Kelowna, West Kelowna, Nanaimo, Lantzville, Metro Vancouver and the Capital Regional District around Victoria.
The B.C. government expects to collect most tax revenue from foreign owners and what the province calls “satellite families” who live in B.C. while the main income earner is a foreign resident. Applied to assessed value each calendar year, the tax started at 0.5 per cent of value for 2018, and goes up to two per cent for 2019
There are about 12,000 property owners required to pay or rent out their vacant home, with 4,600 of them foreign owners and 3,060 classified as satellite families.
More than 98 per cent of B.C. residents are exempt from the tax, mostly because their principle residence is their only home in B.C. Other vacant homes are exempted because the property is recently acquired or inherited, under construction or renovation, or are rented out at least six months of the year.
Ministry data show 5,400 vacant homes are exempted because strata councils don’t allow rentals in the building. James said meetings with the mayors will determine if that exemption continues for 2020 and beyond, or if the tax applies starting next year.
more to come…