Cabins, rural homes spared BC speculation tax

VICTORIA (NEWS 1130) – BC’s proposed housing speculation tax will target urban areas and spare rural cabins and properties according to changes unveiled by the Minister of Finance Monday.

The list of five changes begins by narrowing the communities within the Lower Mainland and on Vancouver Island where the tax will apply to target housing in urban areas.

Kent, Hope, Harrison Hot Springs and Bowen Island won’t face the tax, but nearly everywhere else in the Lower Mainland and Metro Vancouver will have to pay up if they have a vacant property. While on the island, Parksville, Qualicum Beach, the Gulf Islands and Juan de Fuca areas will be exempt. Whistler was not included.

“The speculation tax focuses on people who are treating our housing market like a stock market,” Finance Minister Carole James said. “People in smaller communities, those with cottages at the lake or on the islands, will not pay this tax. People with second homes outside of high-cost, designated urban areas will not pay the tax. We are going after speculators who are clearly taking advantage of the market, leaving homes vacant and driving up prices.”

The City of Kelowna and West Kelowna will still be included. Both municipalities have vocally opposed the tax saying it will impact vital development and people with summer homes or properties they use to visit family.

“Our infrastructure is in a very sad state, a rural state. We have been able to work with the development community to upgrade that deficiency in infrastructure,” says West Kelowna Mayor Doug Findlater.

After the government shut that idea down of an exemption, he says there could be some major impacts on his city.

“It will slow down our upgrades to infrastructure or it will result in a municipal property tax increase to our residents, potentially as high as two per cent a year.”

He says West Kelowna City Council will be meeting tomorrow night to talk about what it will do next.

The tax will be divided into three tiers. BC residents will pay a continuing rate of 0.5 per cent of the value of their property starting in 2018. Canadians whose primary residence is outside the province will pay 0.5 per cent next year, but the amount they will pay in 2019 and beyond has been reduced from two per cent to one per cent. Foreign property owners will also pay 0.5 per cent in 2018 before the amount raised to two per cent the year after.

Homes over $400,000 will be subject to the tax if they are owned by a BC resident. Strata corporations that don’t allow rentals will be grandfathered into the program, but new rules will be introduced to prevent other stratas from enacting similar rules to avoid the tax.

James says there will be certain exemptions to the tax depending on an individual’s personal circumstances such as a death in the family.

Landlords who rent their properties for more than six months out of the year for at least 30 days at a time will not be subject to the tax.

The tax would be in addition to Vancouver’s current one per cent empty homes tax.

The NDP budget predicted the program would bring in $200 million and James says she is “comfortable with the numbers we have in our budget” despite the reduction in the tax on non-BC residents.

James did not dismiss the idea that areas could be added or removed based on their housing markets in the future, but says the government will be monitoring the tax.

Green Party leader Andrew Weaver is backing the adjustments made by the NDP, saying “it’s a positive sign that this government is willing to listen to British Columbians” in a statement.

The Green’s Adam Olsen, MLA for Saanich North and the Islands, says he is also pleased as many of his constituents’ concerns were addressed in the changes.

BC Liberal leader Andrew Wilkinson accused the NDP of backpedaling on a major tax in their budget and “making up half-baked tax policy on the fly.”

“After trying to implement taxes by trial and error, the NDP are now scrambling to come up with a plan,” Wilkinson said. “The updated version of this tax still doesn’t focus on speculators who are flipping homes and condos. Instead, the NDP introduced arbitrary boundary changes to exempted areas that appear to be politically motivated.”

The proposed bill is expected to go to the Legislature in the fall.