Sutton Showplace Realty (2015) Chilliwack

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B.C. speculation tax changed to exempt Gulf Islands properties

27 March 2019
Sutton Showplace Realty Chilliwack

The changes include limiting the geographic areas of the tax to Nanaimo and Greater Victoria, exempting Parksville, Qualicum Beach, the Gulf Islands and Juan de Fuca areas that had originally fallen under the regional districts in both areas that were to be subject to the new tax.

Metro Vancouver’s scope is tightened too, with the original Fraser Valley location being reduced to Mission, Abbotsford and Chilliwack, meaning Kent, Hope and Harrison Hot Springs are now exempt. Bowen Island is also exempt. Whistler, which is suffering a rental crisis, was not included in the tax. However, the municipalities of Kelowna and West Kelowna remain part of the tax, despite a request to government to be exempted

“Over 99 per cent of British Columbians will not pay the tax,” said James. “Only those who hold multiple properties and leave them empty in our province’s major cities will be asked to contribute.

“People with cottages at the lake, or cabins, or on the islands, will not pay this tax. People with second homes outside of high cost urban areas will not pay the tax. We’re going after those who are clearly taking advantage of the market and driving up prices. We’re ensuring housing stock in our major cities is available for people who work hard and live in those cities.”

The government unveiled three rate structures for the tax as well. The full rate of two per cent will be reserved for foreign property owners, a middle rate of one per cent for out-of-province owners and the lowest rate of 0.5 per cent for British Columbians who own multiple properties but don’t rent them at least six months of the year. 

“Properties that are used as qualifying long-term rentals are exempt from the tax,” read a government background document. “Homes will need to be rented out for at least three months to qualify for an exemption in 2018. Starting in 2019, homes will need to be rented out for at least six months, in increments of 30 days or more, to qualify for an exemption.”

The rate redesign comes with a change to how the speculation tax would be administered.

At first, it was proposed to be paid up front and then offset by a non-refundable income tax credit to be applied in that fiscal year, potentially months later. That’s still the case for foreign and out-of-province owners. But B.C. residents will be given an upfront tax credit program that will give them the bill, if any, without having to go through the income tax system. The credit will be up to $2,000, said James, but only applicable to one extra property.

Also, properties valued at below $400,000 in urban areas such as Metro Vancouver and Greater Victoria will be exempt if owned by a British Columbian. People who own properties in condos where strata corporations don’t allow rentals will be temporarily grandfathered into the program, said James, but with a caution that government won’t allow stratas to try to change their rental rules now to avoid the tax. And there will be “special exemptions” for cases in which a senior goes into long-term care or there is a death in a family, said James.

Article sourced from The Vancouver News: https://bit.ly/30MhTH5