BC Expands Speculation Tax to 13 More Communities
British Columbia’s speculation tax is about to expand to 13 more communities: Vernon, Coldstream, Penticton, Summerland, Lake Country, Peachland, Courtenay, Comox, Cumberland, Parks will and Qualicum Beach.
The main reason? To expand the number of rental properties and house BC’s rapidly growing numbers of would-be renters.
As of January 2025, property owners in these 13 communities will start having to declare what their property was used for the previous year.
To avoid paying the tax, owners of empty homes in these communities will need to rent their property out for at least six months of the year (ideally full-time). This includes those who own a second home, maybe a vacation property, there. If they don’t rent or sell their empty home, they must pay the speculation tax. Why?
When adding the 13 new communities, which now totals 59, BC’s Finance Minister Katrine Conroy announced, “Homes shouldn’t be left empty and they shouldn’t be used as investments by speculators.”
Mind, the tax still doesn’t apply to tourism-dependent municipalities like Whistler and Tofino. It’s highly targeted and always has been.
The tax was introduced in Vancouver in 2017.
Its purpose was to fight the domestic housing crisis and skyrocketing real estate prices. Said crisis and public outrage were fueled by knowledge of the numbers of Vancouver homes sitting empty for months on end. Seemingly, their owners - many of whom were foreigners - were awaiting the chance to flip the homes for enormous profits.
That affected how the tax was designed and has been targeted. For foreign owners, the rate totals two per cent of their empty property’s assessed value. The same goes for satellite families, families where less than half of the combined household income is taxed in Canada on Canadian tax returns.
But for Canadian citizens and permanent residents, it’s 0.5%.
It’s noteworthy that, according to the BC government’s website, “More than 99 percent of people in British Columbia are expected to be exempt from the tax.” So, clearly, the policy works.
Since its introduction, the tax has brought in $313 million and helped increase rental stock in Metro Vancouver by 20,000 units in 2020.
On January 3, 2023, BC’s NDP government brought in the Real Estate Development and Marketing Act. It mandated a three-day cooling-off period after the purchase of most homes.
The purpose? To protect buyers from being pressured into high-risk sales. Bottom line? During the three days, a buyer with a cooler head can choose to walk away from the purchase and pay a nominal penalty of 0.25% of the agreed-to price. So, a million-dollar purchase would entail a $25,000 charge.
Will this affect the rest of Canada’s real estate law firms?
To date, no other real estate boom in Canada has rivaled BC’s, most especially Vancouver’s. Not even Toronto or Montreal’s. And where goes BC, so follows the rest of us.
Ontario already has a similar tax in place in Toronto and Ottawa. Don’t be surprised if that expands, with speculation taxes emerging cities across the country.
If you’re using RealtiWeb for your BC real estate matters, we have a dedicated statutory declaration available.