Speculation tax rising in new year

The B.C. government has confirmed plans to increase the speculation and vacancy tax next year.

Finance Minister Carole James says the tax rate for foreign owners and satellite families will rise to two per cent, up from the current half a per cent (0.5).

The province defines “satellite families” as families who live in B.C. while the main income earner is a foreign resident.

The tax applies to secondary homes vacant for six months of the year or more in the designated cities of Kelowna, West Kelowna, Abbotsford, Chilliwack, Mission, Nanaimo, Lantzville, Metro Vancouver and the Capital Regional District around Victoria.

James says the tax had a successful first year, raising an expected $115 million to help fund affordable housing projects where the tax is applied.

“When we introduced the speculation and vacancy tax, our province was at the peak of a real estate crisis and moderation in the market was long overdue,” said James. “Based on the data from the first year, we see the tax is working as it was designed to – capturing speculators, foreign owners and people who own vacant homes, while exempting more than 99.8 per cent of British Columbians.”

Some homeowners have filed a lawsuit against the tax, claiming it unfairly targets residents and out-of-country Canadians who split their time between two homes, many of them retirees with limited income.

The CBC says the suit alleges the tax is unconstitutional, infringes on the Charter of Rights and Freedoms, and is beyond the power of the provincial government.

The plaintiffs want an injunction to stop the province from imposing the tax.

“After hearing from local leaders, communities and those impacted by the housing crisis, we took a close look at how we can build on the success of our first year – and with these new improvements, we’ve done just that,” said James. “I recognize there are a variety of views on the speculation and vacancy tax. There are those who oppose the tax and others who want to implement additional tax. I look forward to continuing discussion as we work together to tackle the housing crisis.”

Data from the first year shows that 90 per cent of the revenue came from foreign owners, satellite families and Canadians living outside of B.C.

There are about 12,000 property owners required to pay or rent out their vacant home, with 4,600 of them foreign owners and 3,060 classified as satellite families.

More than 98 per cent of B.C. residents are exempt from the tax, mostly because their principal residence is their only home in B.C.