What is Speculation tax? How will it affect you? What do I need to know?
These are the questions I’m here to answer, and to put you at ease. These facts are from the BC.gov website.
So what is Speculation Tax?
According to our BC Government. Quote, “The tax is designed to capture foreign and domestic speculators, satellite families who live in B.C. but do not pay their share of income taxes, as well as homeowners who hold vacant property in designated urban centres. The speculation tax applies to residential property in British Columbia’s largest urban centres facing the housing affordability crisis. These are regions with low vacancy rates that are facing severe affordability challenges in which home prices drastically exceed local incomes." Unquote
In a nut shell, if you own a second home in the affected areas that is currently not occupied by either owner or tenant the tax will apply to you. The tax will be applied as follows.
In 2018, the tax rate for all properties subject to the tax is 0.5% on 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).
But don't worry theirs a tax break for us BC Folks only,
British Columbians who are Canadian citizens or permanent residents, and not part of a satellite family, will be eligible for a tax credit that is immediately applied against the speculation tax. This credit will offset a total of $2,000 in speculation tax payable. For homeowners with multiple properties, the tax credit will only apply to one property. This tax credit will ensure that British Columbians do not pay tax on a second home valued up to $400,000. For more expensive vacant properties, the credit ensures that tax only applies to the value of the property above $400,000.
With all this, you need to know if this applies directly to you.
You Pay the Tax if:
Foreign speculators and satellite families:
- Households with high worldwide income that pay little income tax in B.C.
- Owns a home in the affected area.
Canadians who live in BC:
- Owns a home that is un-occupied for more than six months in a calendar year.
Canadians who live outside BC:
- Has a secondary home in BC in the affected area,
- Home remain empty for more than six months of the year.
You don't Pay the Tax if:
- Those with homes and cottages are outside the designated urban centres
- Homeowners with properties in designated urban centres, but who rent them out long-term
- People who hold properties in designated urban centres will also be exempt from the tax if they rent the properties out at least six months a year
There will also be exemptions for:
- The owner or tenant is undergoing medical care or residing in a hospital, long-term care or a supportive-care facility
- The owner or tenant is temporarily absent for work purposes
- The registered owner is deceased and the estate is in the process of being administered
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