Blog

What is the speculation and vacancy tax?

The speculation and vacancy tax is an annual tax paid by some owners of residential properties in designated taxable regions of B.C.

The tax is designed to discourage housing speculation and people from leaving homes vacant in B.C.’s major urban centres. More than 99% of British Columbians are expected to be exempt from the tax.

All residential property owners in the taxable regions must complete a declaration, even if they’re eligible for an exemption.

Note: The speculation and vacancy tax is distinct from the empty homes tax in the City of Vancouver.

Where does the speculation and vacancy tax apply?

Your residential property might be taxable if it’s located in one of these geographic areas:

• Municipalities within the Capital Regional District. This excludes Salt Spring Island, Juan de Fuca Electoral Area and the Southern Gulf Islands
• Municipalities within the Metro Vancouver Regional District, excluding Bowen Island, the Village of Lions Bay and Electoral area A, but including UBC and the University Endowment Lands
• The City of Abbotsford
• The District of Mission
• The City of Chilliwack
• The City of Kelowna
• The City of West Kelowna
• The City of Nanaimo
• The District of Lantzville

Reserve lands, treaty lands and lands of self-governing Indigenous Nations are not part of the taxable regions.

Islands that are accessible only by air or water are not part of the taxable regions.

Some residential properties are excluded from the speculation and vacancy tax, even though they are located within a taxable region. These include residential properties owned by:

• An Indigenous Nation
• Municipalities, regional districts, governments and other public bodies
• Registered charities
• Housing co-ops
• Certain not-for-profit organizations

If you’re not sure if your residential property is in a taxable region, contact us to find out:

Toll Free: 1 (833) 554-2323
Outside North America: 1 (604) 660-2421
Email: spectaxinfo@gov.bc.ca

How much is the speculation and vacancy tax if my residential property isn’t exempt?

For properties owned on December 31, 2018, the tax rate is the same for everyone: 0.5% of the assessed value of your residential property on July 1, 2018, as determined by BC Assessment. B.C. owners are eligible for a tax credit of up to $2,000 on secondary properties to offset their tax payable. The credit is limited to $2,000 per owner and $2,000 per property (in the case of multiple owners) per year.

For 2019 and onwards, the speculation and vacancy tax rate will vary, depending on your residency and where you pay income tax:

• 2% for foreign owners and satellite families
• 0.5% for British Columbians and other Canadian citizens or permanent residents who are not members of a satellite family

The speculation and vacancy tax applies based on ownership as of December 31 each year.

A satellite family is an individual or spousal unit where the majority of their total worldwide income for the year is not reported on a Canadian tax return.

If a residential property has multiple owners, tax is divided among each owner based on their ownership share. For example, if you and your spouse are equal owners of a residential property in a taxable region, you’ll each owe tax on 50% of the home’s assessed value.

A corporation, trustee or partner will pay tax at the highest rate that would be applicable to any of the corporate interest holders, beneficial owners or partnership interest holders if they held the residential property individually.

What Are the Exemptions to the Speculation and Vacancy Tax?

If my home is in a designated taxable region, will I have to pay the speculation and vacancy tax?

For 2018, most British Columbians will be exempt if they either live in their home as their principal residence or rent out their property for at least three months of the year. Short-term rentals for periods of less than one month do not count towards the three-month total.

For 2019 and onwards, over 99% of  British Columbians will continue to be exempt. A home that is not a principal residence must be rented for at least six months per year to be exempt from the speculation and vacancy tax. Short-term rentals for periods of less than one month do not count towards the six-month total.

What other exemptions could I be eligible for?

You may be eligible for other exemptions, even if your residential property isn’t your principal residence and you don’t rent it out for the minimum number of months per year.

If you’re not exempt, you’ll receive a tax notice with the amount you owe.

Review the full list of exemptions and exclusions.

What if I am the co-owner of a taxable residential property?

Exemptions are based on how each person uses each residential property. If you’re the co-owner of a residential property in a taxable region and are exempt, but the other owner isn’t exempt, the other owner will have to pay tax based on their percentage ownership of the residential property as listed with the Land Title Office.

What if the owner is a corporation, trustee or partner?

Many of the exemptions available to individuals are also available to corporations, trustees or partners that own residential property.

How do the tax credits work?

If you’re not eligible for an exemption, you may qualify for a tax credit.

B.C. owners – B.C. owners are eligible for a tax credit of up to $2,000 on a secondary property. This means an owner of a home assessed at up to $400,000, who would otherwise pay the tax, will be exempt, since the value of the tax credit is equal to or more than the amount they would owe. This also means an owner of a home assessed at above $400,000 will only pay tax on the amount over $400,000 (for example, for a $500,000 property, the owner will only pay tax on $100,000). The credit is limited to $2,000 per owner and $2,000 per property (in the case of multiple owners) per year. The tax credit cannot be carried forward or transferred to a spouse.

Foreign owners and satellite families – Foreign owners and satellite families can claim a tax credit equal to 20% of their B.C. income to reduce the 2% speculation and vacancy tax owing. The tax credit cannot reduce the tax rate below the rate for an equivalent B.C. resident (zero on a principal residence or 0.5% on other properties). Unused B.C. income may be carried forward for up to two years or transferred to a spouse. The tax credits are pro-rated in 2018, when the tax rate is 0.5% for all owners.

Other Canadians – Non-B.C. resident Canadians will be eligible for a tax credit based on that income claimed in B.C. The tax credit cannot reduce the tax rate below the tax rate for an equivalent B.C. resident. Unused tax credits may be carried forward for up to two years or transferred to a spouse. The tax credits are pro-rated in 2018, when the tax rate is 0.5% for all owners.

How Do I Complete My Declaration for the Speculation and Vacancy Tax?

What is a declaration for the speculation and vacancy tax?

All residential property owners in a designated taxable region have to complete an annual declaration to claim any relevant exemptions.

If you own residential property in a designated taxable region, the Province will send you a speculation and vacancy tax declaration letter telling you how to complete your declaration. The letter will list all the residential properties you own.

Does everyone have to complete a declaration?

If you don’t own residential property in a designated taxable region, you don’t need to complete a declaration because the tax doesn’t apply to you.

If you own residential property in a designated taxable region, you will need to complete a declaration. Even if you won’t be required to pay the tax, you need to complete a declaration to claim any relevant exemptions.

How Do I Pay the Speculation and Vacancy Tax?

When do I have to pay my speculation and vacancy tax?

If you owe speculation and vacancy tax, your payment is due by July 2, 2019.

What methods of payment can I use?

You will be able use our online payment system or you can also pay through your financial institution, by cheque, or in person at a Service BC centre.

What happens if I don’t pay all or part of what I owe?

If you are charged the speculation and vacancy tax but don’t pay what you owe, you may be charged a penalty and interest in addition to the amount of tax you owe.

What happens if I pay the speculation and vacancy tax, then find out later I’m exempt? Can I get a refund?

Yes. You’ll be able to receive a refund if you paid the speculation and vacancy tax but learn later that you’re exempt. You will need to contact us to request the refund or the credit will be applied to your next year’s speculation and vacancy tax.

Information courtesy of the Government of BC