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New Tax Law For Canadians With BC Vacation Homes

10 Mar
Leo Chrenko March 10, 2018 0
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Early this year, British Columbia rolled out a new property tax. But this property tax isn’t singling out the local BC population, but actually out-of-province owners instead. Indeed, the government plans to tax vacation homes where the government is expected to send big bills to those properties.

The reason this has come about was due to this years budget. Specifically the government is calling forth something called speculation tax. This special tax is aimed directly at domestic property owners who have recently been parking capital in housing areas. It’s their answer to this situation as the province has seen a spike in housing prices throughout the province with this tactic.

For the record, this particular tax only applies to individuals who don’t pay income tax within BC. This means people who’s primary residences are in BC are exempt along with individuals who are long-term renters.

Even in situations where you use your vacation home several times over the year, if you are out of province and the house is vacant at some point in time, you will be taxed. That being said, the rule may change as the law has yet to be implemented into legislation at the moment, but expect it soon.

As for what has already been discussed, the BC Finance Minister, Carole James, has made some information public through her interviews. She’s stated in the past that this tax will be imposed in specific areas. Those being Metro Vancouver, Fraser Valley, Vancouver Island and its regions of Victoria and Nanaimo as well as the municipalities of Kelowna as well as West Kelowna. The reason for that is a lot of Albertans own vacation properties in those areas, though it’s difficult to say how many. The government has estimated that this tax will apply to a total of 15,000 properties, roughly 1 per cent of total residential properties in BC.

Upon implementation this year, the tax will be charged based on 0.5 per cent of the assessed value of the property. This rate will be expected to rise to 2 per cent by the following year and stay there. Unlike property tax though, this rate is expected to be charged on a yearly basis. Regardless, the government predicts this new tax will bring $200-million per year.

As far as this change goes, the public feels different. For some, people think that this new law is ridiculous. After all, many Albertans visit BC and enjoy it there. Furthermore they boost the economy by spending a good quarter of the year in these vacation homes. With the property tax as is most pay a under $5,000, however with this new tax law, they will be paying additional tax that could easily quintuple their property tax.

Some others believe that with this new property tax, many people will be turning to sell. A lot of people will be weighing the costs of going vacationing there and keeping the property or simply selling it.

Finally some people aren’t particularly phased by this new property tax stating that owners who use the home as a vacation home aren’t part of the common work force that’s struggling financially. Some have reinforced this by stating that there is no tax on Earth that hits exclusively the people that the tax was made for and no one else. There will be people angry about the tax just as much as people who aren’t impacted as much.

Another thing to note though is there is a way around this unique law. Since this is the first of it’s kind in Canada (with the exception of PEI stating you can’t have more than five acres or 50 metres of shoreline), there are alternatives. The Finance Minister has proposed that individuals who own vacation homes to rent them as long-term rental properties are exempt. That being said, long-term rental has yet to be defined within this context.

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