After a successful first year of targeting speculators, the speculation and vacancy tax’s (SVT) second year will see the tax rate for foreign owners and satellite families rise to 2%.
More than 99% of British Columbians will remain exempt. Additional exemptions will be provided for military families and water-only access properties.
“When we introduced the speculation and vacancy tax, our province was at the peak of a real estate crisis and moderation in the market was long overdue,” said Carole James, Minister of Finance.
“Based on the data from the first year, we see the tax is working as it was designed to — capturing speculators, foreign owners and people who own vacant homes, while exempting more than 99.8% of British Columbians.”
In the second year of the SVT:
The tax rate for foreign owners and satellite families will rise to 2% in 2019, up from 0.5% in 2018. Money raised through the tax funds affordable housing in areas where the tax applies.
Property owners will benefit from a retroactive exemption for Canadian Armed Forces members and spouses while in active service, and a retroactive exemption for people who own properties accessible only by water.
A longer phase-out will be provided for temporary exemptions:
The exemption for rental restricted stratas will now end Dec. 31, 2021.
The exemption for strata accommodation properties will now end Dec. 31, 2021.
The exemption for vacant land will end Dec. 31, 2019.
To prevent tax avoidances, the ministry is increasing the identification and information required of corporations, trusts and partnerships, and foreign owners. These changes are being put in place to improve efficiency and compliance and will not affect the vast majority of British Columbians.
“After hearing from local leaders, communities and those impacted by the housing crisis, we took a close look at how we can build on the success of our first year — and with these new improvements, we’ve done just that,” said James.
“I recognize there are a variety of views on the speculation and vacancy tax. There are those who oppose the tax and others who want to implement additional tax. I look forward to continuing discussion as we work together to tackle the housing crisis.”
These improvements will come into force by regulation. Residential property owners will be able to claim the exemptions or amend their 2018 declaration mid-January 2020.
In its first fiscal year, the tax is forecast to raise $115 million in revenue to help fund affordable housing projects where the tax is applied.
Data from the first year shows that 90% of the revenue came from foreign owners, satellite families and Canadians living outside of B.C.