Homeowners in B.C.’s largest urban centres will need to apply for exemptions from the province’s new speculation tax or receive a bill, whether they are speculators or not, the government announced Tuesday.
The Ministry of Finance said letters outlining the first speculation tax fees and exemption processes will begin arriving at all homes in Kelowna starting this week.
It will be up to all homeowners to apply for exemptions, with a deadline of March 31. Those who don’t apply, or qualify, will be sent tax bills due to be paid by July 2. The opt-out process will become an annual event for property owners under the new speculation tax rules. People who pay mistakenly can get a rebate within six years, according to the ministry.
The NDP government’s speculation tax was announced in the February 2018 budget and described as a way to encourage owners of empty residences to put them onto the rental market, or sell, in areas where housing is unaffordable and rental vacancy rates are low.
Although first billed as a surcharge on out-of-province real estate speculators, it was later revealed that an estimated two-thirds of those who will pay the tax will be British Columbians.
The tax rate is 0.5 per cent of a home’s assessed value in 2018, which would be $5,000 a year for a property assessed at $1 million. Starting in 2019, the rate rises to two per cent for out-of-province owners, foreigners and satellite families (households where more than 50 per cent of income comes from outside Canada).
Owners are exempt from the tax if it is their principal residence, they rent it at least six months of the year (only three months is required in 2018), they are disabled, the property was just inherited, it’s valued under $150,000, or a person was away and it was vacant due to medical reasons, residential care, work or spousal separation.
Condos and apartments in buildings where stratas ban rentals are also exempt, but only for 2018 and 2019, to give stratas time to change their bylaws, according to the ministry.
British Columbians with second homes who aren’t exempt will still get a credit intended to cover the tax on the assessed value up to $400,000, with the remaining value of the property then taxed at the full rate.
So far, the only city in the Okanagan that will be subject to the speculation tax is Kelowna. Want to chat about it some more? Call or email Gibson Contract at 250-469-9704 or email@example.com.