2018 the Government of BC was under pressure to respond to skyrocketing housing prices in BC. In response, the government introduced the Speculation and Vacancy Tax. The Government of BC says: “The speculation tax is designed to turn empty homes into housing for British Columbians, and to ensure that foreign owners and those with foreign income contribute fairly to British Columbia’s tax system.” The idea is that the speculation tax would reduce profits made by those trading in real estate, which would allow the market to cool, and create a new source of income for the government to apply to the development of affordable housing. This tax is an annual tax that applies based on how property owners use their residential property, the property owner’s residency status, and where owners earn and report their income.

Process:

  • Registered homeowners in a designated taxable region (basically every town and municipality in BC is in a “taxable region”) must complete a declaration each year to declare their residency status and how their property has been used. A declaration must be made each year and is due of March 31st of each year. If you owe tax, you must pay by the first business day in July. Every registered owner of a property must complete a declaration, even if the other owner is your spouse or relative.
  • Over 99% of British Columbians are exempt from the speculation tax. Generally, a British Columbian owner is exempt if their home is their principal residence. There are many exemptions that can apply to an individual, including but not limited to: if your home is occupied by a tenant, if you inherited the property, if the residence is uninhabitable, bankruptcy, death, divorce, and more. More information on exemptions can be found on the Government of British Columbia’s website.

If you owe tax, the rate varies. The rate is a small percentage of the assessed value of your
residential property. From 2019 onwards, the tax is 2% for foreign owners and satellite families
(untaxed worldwide earner), and 0.5% for British Columbians and other Canadian citizens or
permanent residents. The tax applies based on ownership as of December 31st of each year.

For more information, visit:

https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy-tax