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If you're a property owner in British Columbia, you may have heard about the Speculation and Vacancy Tax. But what is it exactly?
The Speculation and Vacancy Tax is an annual tax designed to ensure that foreign owners and satellite families are fairly contributing to BC's tax system. It affects owners of vacant homes or homes that are empty more than six months of the year.
The tax rate is calculated based on ownership as of December 31 each year. Canadian citizens or permanent residents of Canada who are not members of a satellite family will pay a lower tax rate of 0.5%, while foreign owners and satellite families will pay a higher tax rate of 2%. However, the BC Government has stated that over 99% of British Columbians will fall into the exemption category for the Speculation and Vacancy Tax.
If you're living in your principal residence, or are an owner of a property with tenants currently living in it, you will generally be exempt.
But what if you do have to pay the tax? Are there any tax credits available? It depends on whether you're a BC owner, foreign owner/satellite family, or non-resident.
BC owners are eligible for a tax credit of up to $2,000 on a secondary property, meaning that an owner of a home assessed at up to $400,000 and would otherwise pay the tax will be exempt.
Foreign owners and satellite families can claim a tax credit equal to 20% of their BC income, and non-resident Canadians will be eligible for a tax credit based on their income claimed in BC.
It is important to note that even if your home is not vacant, you still have to declare and claim your exemption if you're in a taxable region that applies for the Speculation and Vacancy Tax in BC. The easiest way to declare is online at gov.bc.ca/spectax.
Declaration letters are mailed out to your mailing address in phases based on postal code from January 20 through February 18, 2023. Declarations are due no later than March 31st, so make sure that you get yours in as soon as possible.
The taxable regions for the Speculation and Vacancy Tax include the following municipalities:
The Capital Regional District
Nanaimo
Metro Vancouver municipalities
Abbotsford
Mission
Chilliwack
Kelowna.
(NEW as of January 2023) Municipalities of North Cowichan, Duncan, Ladysmith, Lake Cowichan, Lions Bay, and Squamish
REMEMBER: Even if a property has joint owners, each owner must complete a declaration.
If you do have to pay the BC Speculation and Vacancy tax, the declaration is due at the end of March, and the payment is due at the beginning of July of each calendar year. You can pay through the government's online payment system, your financial institution, by cheque, or in person at a Service BC centre.
Do you still have questions? Make sure to check out this BC Government website or this video for a complete breakdown:
Don't forget to reach out if you have any further questions!