In July, the government of BC claimed that they expected to collect about $115 million in the first year from this tax coming from people living outside of the province. This amount may actually have been higher than what they expected to collect. In terms of what the government is going to do with the money, we’ve heard from the Ministry of Finance would be using this money for new affordable housing projects across BC.
Doing what’s best for the people
Finance minister Carole James said, “It’s important we take a look at the tax and the impact on the communities and the impact on affordable housing and housing floor people in the province.”
Because of high real estate values, the speculation tax ranges from 0.5 per cent to 2.0 per cent on the added value of the home. Funny enough, but not really a surprise, the homes that have been hit the hardest were on average 46 per cent more expensive than those exempted. These were luxury mansions and mega homes that were hit.
How to be exempted
So far, only around 2,000 of the 12,000 homes affected were owned by BC residents with multiple properties. It’s believed that more BC residents were willing to rent their homes in order to avoid paying the tax. If people aren’t paying the tax, it means that they are renting, which means that the housing shortage is being dealt with and more homes are being made available for BC residents.
Homeowners who were exempted rented out their property at least 6 months of the calendar year.
What is the speculation tax
The speculation tax was introduced in BC in 2018 to level the real estate market and crack down on foreign-owned properties that have been left vacant.
This is an opt-out tax paid when the property is vacant. It is paid in addition to the regular property tax. The government states that the speculation tax is a key measure in tackling the housing crisis in major urban areas.
Homeowners need to fill out a declaration form to avoid paying this tax. If your residential home is your primary home, then you’re exempt and as says earlier, you are also exempt if you rent the property for at least six months of the year. No matter what, you still are responsible for filling out the declaration form to avoid being taxed.
Everyone should expect to receive their declaration forms in the mail by February 21st depending on where they live.
What the stats say
What’s been revealed in terms of homeowner statistics is as follows:
- 38 per cent are foreign residents
- 27 per cent are satellite families
- 13 per cent are Canadian home owners
- And 2 per cent are were properties owned by corporations.
We still need the government to release more details before researchers can come to any conclusions.