BC speculation tax rakes in another $78 million for affordable housing | Daily Hive

Downtown Vancouver skyline and a single-family neighbourhood in winter. (Shutterstock)

Newly released data by the provincial government shows British Columbia’s speculation and vacancy tax (SVT) raised $78 million in the 2021 tax year.

Foreign homeowners and satellite families required to pay the tax accounted for 57% or $44.4 million of SVT’s total revenues.

Between 2018 and 2021, the provincial government raised over $300 million from the lifespan of SVT to date.

For the 2022 tax year, the provincial government is expected to see about $90 million in SVT revenues, based on the second quarter fiscal update released last week.

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This was the tax’s fourth year after its initial launch in 2018 as an interventionist measure to curb unwanted demand in the real estate market that pushes home prices upwards, while also creating a new source of revenue to help fund new affordable housing building projects.

The provincial government states over 99% of people who live in BC were exempt from paying the SVT in the most recent tax year, and the number of provincial residents paying the tax in 2021 fell by 4.3% compared to the previous tax year of 2020.

About 26,000 additional homeowners claimed the principal residence exemption between 2020 and 2021 because the unit was no longer vacant. This suggests there are now fewer vacant homes.

The SVT rate is 0.5% of the assessed value of a home deemed vacant by Canadian citizens or permanent residents, and 2% for foreign owners and satellite families.

According to the provincial government’s initial analysis, the SVT is working as intended, with the tax estimated to have encouraged the conversion of 20,000 condominium units into rental housing within Metro Vancouver between 2018 and 2020.

SVT’s existing taxable areas are Metro Vancouver, Fraser Valley, Greater Victoria, Kelowna and West Kelowna, Nanaimo, and Lantzville.

Earlier this year, the provincial government announced SVT’s taxable areas would be expanded to North Cowichan, Duncan, Ladysmith, Lake Cowichan, Lions Bay, and Squamish starting in January 2023, which means homeowners in these communities will be required to declare and claim an exemption for the first time in January 2024.

The provincial SVT is separate from the City of Vancouver’s Empty Homes Tax, which is slated to see its tax rate increased to 5% starting in 2023 — up from the current rate of 3%.

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