The new speculation tax announced in the recent British Columbia budget will have limited impact on residents the government says.
The province’s Minister of Finance Carole James said Monday that more than 99% of British Columbians will be exempted from the speculation tax.
“Our government wants to make sure people who live and work here are able to find and afford a good home in their community,” she said. “For too long, this housing crisis was allowed to escalate, and it has hurt working families, renters, students, seniors and others around the province. With this new tax, we’re targeting speculation in the housing market and freeing up vacant housing to be homes for British Columbians.”
James said that the tax is designed to target those who use the BC housing market “like a stock market” and said that those in smaller communities, or who own cottages at the lake or islands will not pay.
“We are going after speculators who are clearly taking advantage of the market, leaving homes vacant and driving up prices,” she warned.
On implementation, the speculation tax will apply to:
- Metro Vancouver
- The Capital Regional District (excluding the Gulf Islands and Juan de Fuca)
- Kelowna and West Kelowna
- Abbotsford, Chilliwack and Mission
In 2018, the tax rate for all properties subject to the tax is 0.5% of the property value.
In 2019 and subsequent years, the tax rates will be as follows:
- 2% for foreign investors and satellite families;
- 1% for Canadian citizens and permanent residents who do not live in British Columbia; and
- 0.5% for British Columbians who are Canadian citizens or permanent residents (and not members of a satellite family).
Exemptions include primary residences, qualifying long-term rentals, and tax credits for second homes valued up to $400,000.
Victoria Residential Builders Association says that the tweaking of the details since the tax was announced still doesn’t address the province’s key housing market issue, low supply.
It says that the government has a “fundamentally flawed policy undermining our economy and jobs.”
“Encouraging supply creates affordability and jobs, while oppressive taxes like the Speculation Tax do the opposite. The problem is not the market, it’s govt.,” the association says.