Do you know what the difference is between the B.C. Speculation Tax and the City of Vancouver Empty Homes Tax? With the recent introduction of the B.C. Speculation Tax soon after the City of Vancouver Empty Homes Tax, many are left wondering: what’s the difference? It’s not uncommon to be misinformed or left confused about the nature of each type of tax, why it’s implemented, who is exempt, and the stakes that are involved.
What is the City of Vancouver Empty Homes Tax?
The City of Vancouver Empty Homes Tax aims to reinvest its net revenues into affordable housing initiatives for Vancouver residents. It encourages property owners to rent their properties or perhaps even sell them. The goal is to provide more accessible properties in the midst of the current Vancouver housing market crisis.
This past year, the tax rate of the Empty Homes Tax was 1% of the property’s taxable value as assessed by the government.
All Class 1 Residential properties in Vancouver are liable for declaring their property status. Below is a list of property types that fall under the Class 1 Residential classification:
- Multi-family residences
- Daycare facilities
- Some vacant land
- Seasonal properties
- Single-family properties
- Nursing homes
- Farm buildings
Like the Speculation Tax, the Empty Homes Tax must be declared annually, regardless if you need to pay or not. Most homeowners will be exempt from paying the Empty Homes Tax. The most useful indicators that your property will be exempt is if:
- the property was used as a principal residence by the owner, a family member, or friend for a minimum of six months;
- it was rented for a minimum of six months, of which at least 30 days were consecutive; or
- if it meets one of these criteria.
What is the B.C. Speculation Tax?
The government of British Columbia has decided to introduce the B.C. Speculation Tax in an attempt to mitigate the detrimental effects of the housing crisis. The goal of this annual tax is to:
- Reduce the amount of empty homes so that more living spaces are available to B.C. residents.
- Reprimand foreign buyers and domestic speculators who do not pay taxes despite owning B.C. property.
- Provide more affordable housing through an increase in tax revenues.
For more information on the B.C. Speculation Tax, please refer to the previous blog post found here.
Do I Pay the Empty Homes Tax if I’ve Paid the B.C. Speculation Tax?
So, do you need to pay or complete a declaration for both taxes? Yes, but only if your property is in Vancouver. Though the general objective of both taxes are similar, they are not synonymous and both require annual declarations. Therefore, if you are a Vancouver property owner, you may have to pay for both the municipal and provincial tax!
So, What’s the Difference?
There are three key differences between the Speculation Tax and the Empty Homes Tax.
- Only one owner of the property must complete a declaration under the Empty Homes Tax. The Speculation Tax makes it compulsory for all owners of a property to file individual declarations.
- The Empty Homes Tax is specific to the City of Vancouver. If you are not a Vancouver resident, don’t fret, it does not apply to you.
- Both taxes have varying rates so be aware of any annual changes!