The provincial government’s new speculation and vacancy tax (SVT) is about to enacted, as a deadline for declaration submissions for those who own residential property in areas subject to the tax has just been announced.
Those who own residential property will receive a letter in the mail by the end of February with instructions on how to complete a declaration and register an exemption online. To qualify, this application must be completed by March 31, 2019.
It is estimated that over 99% of British Columbians will be exempt from the SVT, however, homeowners must register to claim their exemption.
Each application is anticipated to take up to 20 minutes to complete on average. A separate declaration must be made by each owner of the property, even if the other owner is a spouse.
Homes are officially “vacant” if left unoccupied for six months or more within a calendar year.
The SVT is intended to target speculators — particularly foreign ownership — and empty homes in a bid to help make housing more affordable in BC. Revenue raised from the SVT will go towards supporting affordable housing initiatives in communities where the tax applies.
The areas subject to the SVT include municipalities within Metro Vancouver (including UBC and the University Endowment Lands), Abbotsford, Mission, Chilliwack, Kelowna, West Kelowna, Nanaimo, Lantzville, and Greater Victoria.
In March 2018, the provincial government announced a modified rate structure for the SVT, which is based on the value of a residential property:
Some exemptions are available for landlords and those who own a secondary home such as vacation homes and cabins. Secondary properties utilized as long-term rentals – homes that are rented out for at least six months of the year for at least 30 days at a time – will be exempt from the SVT.
Those who have homes governed by strata policies that forbid rentals will initially be exempt from the SVT.
British Columbians with a second home valued up to $400,000 will be exempt from the tax through a non-refundable $2,000 tax credit that is immediately applied on the speculation tax. It will offset the tax payable for the home.
Exemptions will also apply for some special circumstances, such as a senior citizen who is entering a long-term care facility and the property of a deceased family member that is going through the probate process.
The SVT is one of the BC NDP’s most significant housing policy measures, and it is expected to generate $200 million in new revenue for the provincial government for the 2019-20 fiscal year.
For homeowners within the City of Vancouver, the SVT declaration is in addition to the municipal government’s Empty Homes Tax, which has a 2019 declaration deadline of February 4.