BC speculation tax set to jump to 2% with end of year

Spec tax set to increase

B.C.’s speculation tax will rise from 0.5% to 2% on Dec. 31. In addition, an exemption for vacant land will end.

Any tax levied Dec. 31 will be due in July.

"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," Minister of Finance Carole James said. "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."

James said in July that the province collected $115 million from property owners in major urban centres deemed to be extremely unaffordable and subject to land speculation, millions more than had been expected.

The government said those funds would be used to help fund affordable housing.

The tax, which affects properties in Kelowna, West Kelowna, Victoria, Metro Vancouver and other hot real estate markets, has been widely panned in the Okanagan.

The Canadian Home Builders’ Association of the Central Okanagan says it has caused significant job losses in the industry, by some estimates as high as 22%.

And, the mayors of Kelowna and West Kelowna have lobbied the province to be excluded.

“The majority of the municipalities that have had this tax imposed were in attendance, and the majority of them, Kelowna and West Kelowna included, believe that it's having a detrimental impact,” Kelowna Mayor Colin Basran said in September.

“I'm not optimistic that any major changes will take place, certainly we didn't get the sense that the tax will be removed.”

In its first year, the speculation tax generated $2 million in revenue in Kelowna alone.

“I've heard personally from a number of people from around the country who said 'we feel like we're not welcome in British Columbia and the Okanagan as a result of this. We're not coming, we'll go somewhere else,'” Basran said.

In its second year, retroactive exemptions will be offered for Canadian Armed Forces members and spouses while in active service, and for people who own properties accessible only by water.

An exemption for rental-restricted stratas will now end Dec. 31, 2021.

Strata condo property owners restricted from renting when the tax became law will continue to qualify for a grandfathering exemption.

– with files from Castanet News

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