Taxing Speculation and Vacancy in Real Estate

0 Comments

On November 22, 2023, the British Columbia government issued a regulation under the Speculation and Vacancy Tax Act, formally known as B.C. Reg. 237/2023. The key change involves expanding the list of areas classified as “specified areas” under the Act.

The speculation and vacancy tax is an annual tax imposed on certain owners of residential properties in designated taxable areas of British Columbia. This tax aims to discourage housing speculation and prevent homeowners from leaving their properties vacant in these areas. Residential property owners in the taxable areas who receive a declaration letter must submit a declaration by March 31 each year, even if they qualify for an exemption. Note that the speculation and vacancy tax is different from the empty homes tax in Vancouver and the Government of Canada’s underused housing tax.

This tax is assessed annually based on how property owners utilize their residential properties, the residency status of the property owner, and the location where they earn and report their income. The revenue generated from this tax is allocated to support affordable housing initiatives in the areas where it is enforced.

The new specified areas now include several municipalities across British Columbia, such as Kamloops, Parksville, Salmon Arm, Courtenay, and Penticton, among others. The aim of this tax is to address housing availability by discouraging the ownership of vacant properties, thereby encouraging their use for housing. By including these additional areas, the government hopes to tackle housing issues in more regions, ensuring that more homes are available for residents and reducing speculation in the real estate market.

This regulation reflects ongoing efforts by the provincial government to make housing more accessible and combat the rising issue of property speculation in the province.

British Columbia (237/2023) November 2023