Part 2: Speculation & Vacancy Tax

This post will address the specifics of the Speculation and Vacancy tax implemented in 2018 by the BC Government and the City of Vancouver Empty Home tax.

From Government of BC – Speculation and vacancy tax

The speculation and vacancy tax is an annual tax based on how owners use residential properties in areas in B.C. affected most by the current housing shortage.

How the speculation and vacancy tax works

The speculation and vacancy tax is designed to turn empty homes into housing for people in British Columbia and ensure foreign owners and those with primarily foreign income contribute fairly to B.C.’s tax system.

This tax is an annual tax that applies based on:

• How property owners use their residential property
• The property owner’s residency status
• Where property owners earn and report their income

The revenue collected through the tax is intended to support affordable housing in the areas where the tax applies. This tax is also different from Vancouver’s empty homes tax and the Government of Canada’s Underused Housing Tax.

Declaration timeline

• Receive your declaration letter from mid-January to mid-February and Declare by March 31.
• Declare how you used your property last year. If asked about your income, use income from the year before last year, as information from your most recent income tax return will not be available.
• If you owe tax, pay by the first business day in July.

For example:

• Received letter January 30, 2021
• Declare by March 31, 2021

You declare how you used your property in 2020. If asked about your income, use income from 2019. If you owe tax, pay by July 2, 2021.

Why everyone must declare?

If a property has more than one owner, a separate declaration must be made for each owner, even if the other owner is your spouse or relative.

Because this tax is based on how each owner uses the property and whether they have foreign income, they need each owner on title to declare separately.

Partner agencies

The speculation and vacancy tax is administered using data from both the Land Title and Survey Authority of British Columbia (LTSA) and BC Assessment.

LTSA provides title and legal description data to BC Assessment, such as:

• All owners listed on title for a property
• Mailing address(es) of owner(s)
• Legal description of property

BC Assessment provides assessment roll data to us, such as:

• Your property classification – to determine if you should get a speculation and vacancy tax letter
• Your mailing address – to mail your speculation and vacancy tax letter
• The assessed value of your property – to calculate any speculation or vacancy tax you may owe if you aren’t eligible for an exemption

Since BC Assessment uses information from LTSA to generate the assessment roll data, it’s important that your information with both LTSA and BC Assessment is accurate.

BC Assessment’s role

BC Assessment determines property values in B.C. They also determine the classification of your property, such as residential or commercial.

The speculation and vacancy tax only applies to properties classified as residential that are also in the designated taxable regions.

If you have concerns about your assessed property value or property classification, contact BC Assessment. The deadline to file a notice of complaint (appeal) with BC Assessment is February 1 each year.

From City of Vancouver – Empty Homes Tax

Vancouver homeowners are required to submit a declaration each year to determine if their property is subject to the Empty Homes Tax.

Properties deemed or declared empty in the 2022 reference year will be subject to a tax of 3% of the property’s 2022 assessed taxable value. The tax rate for the 2023 reference year will increase to 5%.

More details can be found in – Vacancy Tax By-law PDF file (183 KB).

From Vancouver Sun – It’s time to declare for the B.C. speculation and vacancy tax

Many homeowners in B.C. cities — notably in the Lower Mainland, eastern Fraser Valley, Kelowna and southern Vancouver Island — are getting declaration forms in the mail for the provincial speculation and vacancy tax.

The tax, introduced in 2018 by former premier John Horgan’s NDP government, applies to homes in communities where housing is in high demand.

The tax expanded in January to more communities experiencing housing shortages, including North Cowichan, Duncan, Ladysmith, Lake Cowichan, Lions Bay and Squamish. But those areas won’t need to declare until the 2024 tax year.

Anyone who uses a home as a primary residence or rents it out to long-term tenants doesn’t have to pay the tax, and there are a number of other exemptions.

Otherwise, the rate is 0.5 per cent of the home’s assessed value for permanent residents of B.C. and two per cent for foreign owners or members of a “satellite family” — that is, someone who earns most of their reportable income outside Canada.

The B.C. government has said more than 99 per cent of homeowners in the province are exempt, but everyone in a taxable area must declare annually. This year’s deadline is March 31.

While more than 90 per cent of homeowners declare online, you must first receive a letter in the mail that includes a unique code needed to complete the declaration. Those letters have been going out since the second half of January, so many homeowners will have already received their letter or will get theirs soon.

The tax brought in about $78 million in 2021. Over $44 million of that total — about 57 per cent — came from foreign owners and satellite families.

The money is supposedly used to build affordable housing in the communities where the tax is levied, much of it through B.C. Housing.

Taxes on empty houses now exist at multiple levels of government, including at the municipal level in the City of Vancouver proper. Vancouver has its own, separate empty-homes tax. The deadline to declare for that passed on Feb. 2.

The federal government also has empty housing initiatives, including a one-per-cent tax introduced at the start of 2022 on vacant or underused properties, though as with the other taxes, there is a long list of exemptions.

OTHER LINKS:

• Daily Hive – BC government expands Speculation & Vacancy Tax to more communities;

• CBC – B.C. expands speculation tax on vacant homes to 6 more regions

• Storeys – Amount of Vacant Homes in Vancouver Down 36% Due to Empty Homes Tax