All owners of residential property in the designated taxable regions of BC must complete an annual declaration. Over 99% of British Columbians are estimated to be exempt from the tax, which is completely separate from the Vancouver Empty Homes Tax. Unlike Vancouver, non payment follows the person, not the land itself.
How it works:
If you own residential property in a designated taxable region on December 31, the Province will send you a speculation and vacancy tax declaration letter in the mail by mid-February. Each owner must sign their own declaration. Your declaration letter will list all the residential properties you own in the designated taxable regions and will tell you how to declare and claim any relevant exemptions.
Your letter will include two unique identification numbers: a declaration code and a letter ID. These numbers match you to your property. You’ll need these numbers to complete your declaration. You’ll also need your social insurance number to verify your identity.
How to Pay:
If you owe speculation and vacancy tax, your payment is due by July 2, 2019. You will be able to use an online payment system or pay through your bank, or in person at a Service BC centre. If you are charged the tax but don’t pay what you owe, you may be charged a penalty and interest in addition to the amount of tax you owe. Unlike Vancouver, non payment follows the person, not the land itself.
Tax Rate:
The speculation and vacancy tax rate varies depending on the owner’s tax residency. In addition, the tax rate varies based on whether the owner is a Canadian citizen or permanent resident of Canada, or a satellite family.
For 2018, the tax rate is:
- 0.5% of the property’s assessed value for all properties subject to the tax
- For 2019 and subsequent years, the tax rate is:
- 2% for foreign owners and satellite families
- 0.5% for Canadian citizens or permanent residents of Canada who are not members of a satellite family
- The speculation and vacancy tax applies based on ownership as of December 31 each year.
- A speculation and vacancy tax year is the same as a calendar year. Tax levied on December 31 is due the following July. For example, for a property owned as of December 31, 2018, the 2018 tax rate of 0.5% applies and the tax is due on July 2, 2019.
Tax Credits:
If you’re not eligible for an exemption you may qualify for a tax credit. BC Owners are eligible for a tax credit of up to $2000 on a secondary property. This means an owner of a home assessed at up to $400,000 who would otherwise pay the tax, will be exempt, since the value of the tax credit is equal to or more than that amount they would owe.
Satellite Family:
When you complete your declaration for the speculation and vacancy tax, the declaration takes into account where in the world the majority of your combined spousal income is reported. People who declare LESS than 50% of their total combined household income for the year on Canadian income tax returns may pay tax at the highest rate and may not be entitled to all exemptions. People in this situation are considered members of a satellite family. This could apply to you even if you are a Canadian citizen or B.C. resident.
Example of a Satellite Family:
One spouse is a Canadian citizen but isn’t the home owner, while the other spouse is the owner but isn’t a Canadian citizen or permanent resident. Around 70% of their combined worldwide income is earned outside of Canada and is not reported on a Canadian income tax return. Both spouses are members of a satellite family.
Example #2:
One spouse owns the home but is out of the country most of the time, earning 100% of his income from outside Canada with no obligation to report to Canada Revenue Agency. The other spouse and their children live in their B.C. house. Since the combined income of these two spouses is entirely unreported on Canadian tax returns, they are both considered members of a satellite family.
Foreign Owners and Satellite Families:
Foreign owners and satellite families can claim a tax credit equal to 20% of their B.C. income to reduce the 2% speculation and vacancy tax owing. The tax credit cannot reduce the tax rate below the rate for an equivalent B.C. resident
Other Canadians:
Non-B.C. resident Canadians will be eligible for a tax credit based on that income claimed in B.C. The tax credit cannot reduce the tax rate below the tax rate for an equivalent B.C. resident.
Principal Residence:
Principal Residence is where an owner lives for a longer period in a calendar year than any other place;
- People who have multiple homes can only claim the principal residence exemption on the home they live in for the longest period in the calendar year;
- Spouses cannot claim two different principal residence exemptions unless specific situations apply, such as spouses living apart for work or medical reasons or because of separation or divorce;
Principal Residence Exemptions:
Spouses who live apart for work reasons may be able to claim a principal residence exemption on an additional home. Owners will only qualify if one of the following two conditions apply:
- One principal residence is at least 100 km closer to the workplace than the distance between the other principal residence and the workplace; or
- One principal residence is on Vancouver Island and the other residence is not on Vancouver Island
Did you just purchase or inherent a property?:
A newly bought property is exempt if you paid the property transfer tax or didn’t for one of the following reasons:
- First-time home buyers’ exemption
- Newly built homes exemption
- Reversion, escheated or forfeited land exemption
- Transfers to or from a trustee in bankruptcy
- Transfer of land by Public Guardian and Trustee
- Transfer to a veteran or veteran’s spouse
Tenancy:
Owners of homes occupied by a renter or by family or other non-arm’s-length persons for at least six months of the year in increments of one month or more at a time may be exempt (three months for 2018). For the owner to be eligible for the exemption, tenancy requirements must be met.
Residence in uninhabitable:
To be eligible, there must have been at least 60 consecutive days in the year when no one could live there. This exemption is available in the year the property became uninhabitable, and in the following year if the property remains uninhabitable for at least 60 days in the second year.
For more detailed information please consult: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax
