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How to apply for exemption: Details of B.C.'s speculation tax now public
Details of the province's speculation tax are now public, and it appears homeowners living in affected areas will need to apply for exemptions each year.
The tax designed to help control housing prices in urban areas targets those who own residences in B.C. but don't pay taxes to the province. The intent is to encourage owners to find long-term renters, rather than keeping the properties vacant as they wait for the property value to increase.
Those who do not rent out their properties full time, or do not live in them, will pay an additional tax based on the assessed value of their home.
It applies to designated regions in B.C. including Metro Vancouver, parts of the Fraser Valley, Kelowna and West Kelowna. On Vancouver Island, the tax applies to properties in the Capital Regional District, Nanaimo and Lantzville.
How to apply for exemption
The province claims more than 99 per cent of B.C. homeowners will be exempt from paying, but they must declare their exemption each year.
Residential property owners must register their property by phone or online by the end of March. All information, including how to register, will be outlined in letters the province will mail out between Jan. 21 and mid-February.
For properties with more than one owner, each owner must submit their own declaration, even if the owners are related or spouses.
Anyone who hasn't received a declaration letter by late February is asked to call the dedicated speculation and vacancy tax hotline at 1-833-554-2323.
The province reminds Vancouver residents that the B.C. speculation and vacancy tax is separate from the city's own empty homes tax.
Concerns for homeowners
Greg Kyllo, jobs critic for the BC Liberals, said he's worried the policy could result in some innocent homeowners being served massive tax bills by accident.
He suggested uninformed British Columbians might disregard the letter specifically because they know they aren't real estate speculating.
"I'm worried about senior citizens that may receive the notice, cast it aside … and find out July 1 they have another $4,000 or $5,000 bill," Kyllo said.
Given that only a small fraction of homeowners actually need to pay the tax, Simon Fraser University professor Andrey Pavlov believes there is a better way to collect.
"The government already knows who owns each property, because they are mailing you a letter. Well, they can also check who has paid income tax in British Columbia in the last year, and if anyone has then they don't need to be bothered with any of these declarations," Pavlov said.
What if I don't apply?
This year, those who fail to apply or whose applications are rejected will be subject to a tax rate of 0.5 per cent of their property's assessed value.
However, starting next year, the rate will vary depending on an owner's tax residency and citizenship.
Foreign owners and satellite families – families who earn the majority of their income outside of B.C. and pay little or no income tax in the province – will pay the highest rates (2 per cent), the province said in a statement online.
Residents of B.C., Canadian citizens and permanent residents who are not part of satellite families will continue to pay 0.5 per cent.
For properties with multiple owners, the rate will be split based on the share each person owns.
Owners who live in B.C. and are not exempt are eligible for a tax credit of up to $2,000 on secondary properties.
With files from CTV Vancouver's Bhinder Sajan