B.C.’s speculation tax on vacant homes is being restricted to urban areas, with vacation homes in rural areas exempted, Finance Minister Carole James said Monday.
The Gulf Islands, the Juan de Fuca region in Premier John Horgan’s constituency, Parksville and Qualicum Beach are being exempted, James said. The municipalities of Nanaimo, Lantzville, Abbotsford, Chilliwack and Mission will still be included, as are Metro Vancouver, Greater Victoria and the cities of Kelowna and West Kelowna.
B.C. residents also get a break on the tax rate for vacant second homes in urban areas. The tax takes effect on 2018 property value and stays at 0.5 per cent for B.C. residents with second homes.
Albertans and other Canadians whose principal residence is outside B.C. will pay 0.5 per cent the first year, rising to one per cent in 2019 and beyond. Foreign owners and “satellite families” will be the only vacant home owners charged the full two per cent that James announced in February, effective 2019.
B.C. residents with second homes that are subject to the tax will be eligible for a non-refundable tax credit that applies immediately, the finance ministry says. It offsets up to $2,000 of the new tax, meaning they will pay no speculation tax on properties up to $400,000 in value.
To be considered occupied, a home has to be rented at least six months a year in increments of one month. James said second homes in condo developments that don’t allow rentals will be temporarily exempted as well. Being rented out for three months will be sufficient for exemption in 2018 only.
James said she has heard many calls for change or repeal of the tax she announced in February, but it is needed in large urban areas to give people incentive to rent out vacant homes.
The change is designed to exempt “cottages and cabins on the lake,” James told reporters in a conference call from Vancouver.
As originally announced in the B.C. budget Feb. 20, the speculation tax would be charged to out-of-province residents who inherited a family summer or ski cabin, if it is in Metro Vancouver, the Fraser Valley, Nanaimo or Capital Regional District, or the municipalities of Kelowna and West Kelowna.
James did not comment on the effect the geographical and rate refinements would have on the expected revenue from the tax. She said it is needed to encourage more people to rent out properties that are vacant half the year or more, and to discourage speculative real estate investment.
B.C. Liberal leader Andrew Wilkinson said the NDP budget projected revenues of $200 million from the speculation tax, and now the rate is being cut for many and boundaries are being changed.
“We’re very concerned that the NDP are making up taxes by trial and error,” Wilkinson said.
Exemptions will also be considered for special circumstances such as a resident moving into long-term care or a property sitting vacant due to a death in the family, James said.