'It is wrong': Finance minister says speculation tax of rezoned commercial properties shouldn't go to tenant
VANCOUVER -- B.C.'s finance minister says a solution is coming to help businesses being charged a speculation vacancy tax for the open space above their buildings.
Selina Robinson discussed the tax Tuesday after a Vancouver business reported being dinged on the air space above their restaurant.
Dan Rodriguez, the owner of Las Margaritas in Kitsilano, says his taxes went up by $6,000 this year because of the tax. Rodriguez does not own the land, but he pays taxes and maintenance fees as part of the lease agreement with his landlord.
Robinson explained some commercial property owners have opted to rezone their property for a split assessment, specifically marking the air space above their ground-level unit as residential. Robinson says that option is meant for those planning to redevelop and put homes above their commercial space.
"What that does is of course it triggers a speculation vacancy tax if they do not redevelop that air that is now technically, in many ways, land for homes," she said.
The issue, she said, is when property owners' lease agreements pass those taxes on to their tenant, like for the owner of Las Margaritas.
"We think that that's really not fair and so it's for these very small number of properties that we are identifying how to make sure that they do not have to bear this tax," Robinson said.
The finance minister didn't give a timeframe for that fix, only saying that it would be coming "shortly."
Robinson also explained that properties that are in the process of redevelopment have an exemption from the tax. As well, there used to be a vacant land exemption, but that expired in December 2019 and owners are now also being charged for empty space on residentially zoned property, not just for empty units or homes.
In a statement to CTV News Vancouver regarding Las Margaritas, the finance ministry said, "the ministry can confirm that the owner of the property has gone through the split classification process."
When speaking with CTV News Vancouver earlier this week, Rodriguez said his landlord doesn't have plans to redevelop the restaurant into housing.
"There are about 190 properties in the entire province that are doing this split assessment and they have, by choice, decided to reclassify the air parcel above them from commercial to residential," Robinson said, explaining there's another reason besides redevelopment that an owner might reclassify their space.
"In some cases … you're choosing to reduce your tax burden because the residential portion is taxed at a lower rate," she said.
"I want to point out this is about speculation and those businesses, those commercial landlords that take the air parcel and rezone it for residential, they are speculating."