Understanding the B.C. Speculation Tax

What is the B.C. Speculation Tax?

In 2018, the NDP government introduced the B.C. Speculation Tax in an effort to dampen the hot housing market. The goal of this annual tax is to:

1. Reduce the amount of empty homes so that more living spaces are available to B.C. residents.
2. Reprimand foreign buyers and domestic speculators who do not pay taxes despite owning B.C. property.
3. Provide more affordable housing through an increase in tax revenues.

How to Complete a Declaration?

According to the government, 99% of B.C. residents are exempt from the Speculation Tax. So, a quick rule of thumb to know whether you are exempt is to ask yourself the following questions:

1. Is the property your primary home? If so, then yes, you are exempt.
2. Was the property rented out for at least three months last year (2018)? If so, then yes, you are exempt.

A more detailed list to see whether you qualify for a tax exemption can be found here.

However, be wary of any changes that may occur to exemption criteria, such as the rental period increasing to at least 6 months for the 2019 declaration.

Declarations are very easy and accessible and can be completed over the phone or online. You will receive declaration information and a detailed set of instructions to follow in the mail. If you own a property in one of the taxable regions in B.C., it is crucial that you complete a declaration before the deadline.

If you live in treaty or reserve lands, don’t expect to find a declaration in the mail!

Please don’t forget that properties with multiple owners must file individual declarations.

How are Tax Rates Determined?

If you are not exempt from the B.C. Speculation Tax, the tax rate is dependent on the owner’s residency and of course, whether the owner is a Canadian citizen, permanent resident, or a foreign owner. As such, foreign owners are charged with the highest tax rate. This is because they earn the majority of their income outside the country and avoid income taxes.

Accidentally paid the taxes? Worry not because the finance ministry has confirmed that those who have paid mistakenly can get a refund within six years.