You've most likely heard about the BC NDP Government's budget with it's sweeping taxation of real estate. The focus has been much on the "Speculation Tax" where owners of secondary and mostly vacant homes will be subject to an annual tax of .5% of property value for 2018 and then 2% for 2019 and beyond. It's been said that this is focused on people who pay "little or no tax in BC" and thought to be applicable mainly to Albertans but also anyone outside of BC. That part of the plan is true.
What is not so clear with many is the implementation of the tax. According the the BC Government "The speculation tax will initially apply to the Metro Vancouver, Fraser Valley, Capital and Nanaimo Regional Districts, and in the municipalities of Kelowna and West Kelowna". They go on to say "The speculation tax will target foreign and domestic speculators in BC. These are homeowners who have removed their units from BC’s long-term housing stock".
So, "removed their units from BC's long term housing stock" what does this mean? Does it mean that the government can dictate your use of the property regarding whether you want to rent it out or not? Not according to your freehold rights of property ownership!
And "foreign and domestic speculators"... are these the people who bought their lakefront property in Kelowna 60 years ago but only visit in the summer months? Speculators really?
Back to the tax, and who has to pay it. The government will levy the tax on all applicable property in the affected areas of BC. If the home is owned by a BC resident, they will still have to pay the tax but will receive a non-refundable tax credit for the amount of tax paid. So if that lakefront property held in Kelowna is owned by a BC resident, they can claim the credit. Unfortunately in many cases, the tax credit will be greater than the BC income tax paid so they can only claim their BC income tax amount. For example, if the BC income tax payable is $7000 and the speculation tax on the property is $20000, the homeowner will still be on the hook for $13000 in tax. Or the senior who owns the property and pays no BC tax, they will be responsible for the entire amount! How is this fair?
In the end, this is punitive tax that is completely irresponsible and unfair. The possibility of "unintended consequences" is great. Property values dropping, job losses, businesses closing down, people leaving the province, the list goes on. We urge you to speak to your MLA as well as Premier Horgan and Finance Minister James to voice your concerns. This tax must be stopped!