Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
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BC’s Speculation and Vacancy Tax affects homeowners that have a home that is vacant, or often vacant.
This blog explains what the BC Speculation and Vacancy Tax is, how it is calculated, exemptions, and other frequently asked questions.
For everything you need to know about the BC Speculation and Vacancy Tax – read on!
The Speculation and Vacancy Tax is an annual tax that affects owners of vacant homes or homes that are empty more than 6 months of the year.
The government has stated that it is designed to ensure that foreign owners and satellite families are fairly contributing to B.C’s tax system.
The tax rate is calculated as:
The BC Government has stated that over 99% of British Columbians will fall in to the exemption category for the Speculation and Vacancy Tax.
If you are living in your principal residence, or are an owner of a property with tenants currently living in it then you will generally be exempt.
The speculation and vacancy tax applies based on ownership as of December 31 each year.
Your calculation of tax credit depends on whether you are a B.C owner, foreign owner/satellite family, or non-resident.
Here’s a breakdown of the three categories and how credits are dealt with:
B.C. owners – B.C. owners are eligible for a tax credit of up to $2,000 on a secondary property. This means an owner of a home who has a home assessed at up to $400,000 and would otherwise pay the tax will be exempt. Why? Because the value of the tax credit is equal to or more than the amount they would owe. ($400,000 x 0.5% = $2000)
For B.C. homeowners, this means that if your home is assessed at or above $400,000 that you will only pay the tax for the portion of the assessed value greater than $400,000. For example, if you have a property worth $600,000 then you will only pay the tax on $200,000. ($600,000-$400,000 = $200,000)
There is a credit maximum of $2,000 per owner and $2,000 per property (in the case of multiple owners) per year. The tax credit cannot be carried forward or transferred to a spouse.
Foreign owners and satellite families – Foreign owners and satellite families can claim a tax credit equal to 20% of their B.C. income. The tax credit cannot reduce the tax rate below the rate for an equivalent B.C. resident (zero on a principal residence or 0.5% on other properties).
Unused B.C. income may be carried forward for up to two years or transferred to a spouse.
Other Canadians – Non-B.C. resident Canadians will be eligible for a tax credit based on their income claimed in B.C.
Similar to foreign owners and satellite families restrictions, the tax credit cannot reduce the tax rate below the tax rate for an equivalent B.C. resident.
Unused tax credits may be carried forward for up to two years or transferred to a spouse.
If you are in a taxable region that applies for the Speculation and Vacancy Tax in BC, then regardless of whether your home has been vacant or not, you are still required by claim your exemption and complete your declaration online or by phone.
The easiest way to declare is online at gov.bc.ca/spectax, in which you will need your declaration code & letter ID (refer to the mailout sent by the government), your property address, and your social insurance number to confirm your identity.
The taxable regions include:
Within these areas, any reserve lands, treaty lands, or self-government First Nations are exempt.
For the Speculation and Vacancy Tax, if a property has more than one owner EACH OWNER MUST COMPLETE A DECLARATION. This is true even if the other owner is a spouse.
If you own a property with a co-owner and you fall under the exemption but your partner does not, then you will still be exempt.
Exemptions are based on how each person uses each residential property. If you’re the co-owner of a residential property in a taxable region and are exempt, the other owner will still have to pay tax based on their percentage ownership of the residential property as listed with the Land Title Office.
Typically, the declaration is due at the end of March, and the payment of the BC Speculation and Vacancy Tax, if applicable, is due at the beginning of July of each calendar year.
If you are charged the speculation and vacancy tax but don’t pay what you owe, you may be charged a penalty and interest in addition to the amount of tax you owe.
To pay, the government has an online payment system or you can also pay through your financial institution, by cheque, or in person at a Service BC centre.
No, the City of Vancouver’s Empty Homes Tax is different from BC’s Provincial Speculation and Vacancy Tax – they are not the same tax.
The Speculation and Vacancy Tax is a provincial tax that applies to all properties located in taxable regions in BC (unless otherwise exempt), whereas Vancouver’s Empty Homes Tax is a municipal tax for those within the City of Vancouver.
If you are not exempt, it is possible that both taxes may apply to property in Vancouver.
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