20 Aug BC Real Estate Related New Speculation Tax and What You Need to Know
During 2018 B.C. Budget, the government introduced a 30-point plan to make housing more affordable for B.C. and the new Speculation Tax was introduced as part of the plan. Here is what you need to know about the new Speculation Tax.
What is the Speculation Tax?
- The new Speculation Tax is mainly targeting investors, both domestic and foreign, who own residential property in B.C., but don’t pay taxes in B.C.
- The new tax will apply to the following areas in B.C.:
- Metro Vancouver Regional District (excluding Bowen Island and Electoral Area A, except the part of the electoral area which is the UBC and University Endowment Lands)
- Capital Regional District (excluding the Gulf Islands and Juan de Fuca)
- Kelowna-West Kelowna
- Nanaimo-Lantzville (excluding Protection Island)
- The following tax rate will be applied to the value of the property:
- 2018: 0.5%
- 2019 and going forward:
- 0.5% for B.C. residents who are Canadian Citizens or permanent residents who are not a satellite family member
- 1% for Canadian Citizens or permanent residents who do not reside in B.C.
- 2% for Foreign investors and Satellite families, who are households resides in B.C. with high worldwide income but pay little to non income taxes in B.C.
Who will be affected by the Speculation Tax?
- All residential properties in the above mentioned areas are subject to the new speculation tax.
Are there any Exemptions or Tax Credits Available?
- Exemptions are available to:
- Primary residence in British Columbia
- Properties that are qualified as long-term rentals
- Rented at least 3 months during the year in 2018;
- Rented at least 6 months in increments of 30 days or more during the year in 2019 and onwards
- Special circumstances including:
- The owner or tenant is undergoing medical care or residing in a hospital, long-term care or a supportive-care facility;
- The owner or tenant is temporarily absent for work purposes; and
- The registered owner is deceased and the estate is in the process of being administered
- Tax Credits are available to:
- B.C. residents only and not a satellite family member
- A maximum $2,000 tax credit available to apply again the speculation tax payable
- For homeowners with multiple properties subject to the new tax, the tax credit will only be applied to reduce the speculation tax on one property
ABOUT THE AUTHOR
ANIKE LI, BBA,CPA,CGA
Anike Li is a CPA, CGA and the founder of AL Accounting Inc. AL Accounting Inc. is a CPA firm provides services including IFRS Accounting, Part-Time CFO, Tech Startup Consulting, Corporate & Personal Taxation.
This article should be seen as broad guidance only. AL Accounting Inc. do not accept or assume any liability of any tax consequences that may result from acting based on the information contained therein.