The provincial government of British Columbia has introduced legislation which will tax those individuals who own multiple homes in certain areas of British Columbia.
It will apply to those who own multiple properties in Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and the Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo, Lantzville, Abbotsford, Chilliwack and Mission.
The tax rate on homes will vary depending on the taxation residence of the homeowner. In 2018, both Canadian residents and non-residents will pay a tax of .5% of the assessed value per home per year.
In 2019, the rate for Canadian residents will remain at .5%, whereas the rate for non-residents will increase to 2%.
It is estimated that approximately 2/3 of the people who will be paying the tax will be from British Columbia.
Homeowners can avoid the tax if they rent out the property for at least six months in the year. There is also a credit available for residents of British Columbia which would apply to the first $400,000 of assessed value in the home, which will reduce the tax payable by $2,000 per year.
Municipalities had argued for the option to decide if they wanted the speculation tax to apply in their community. The provincial government denied this request.
Developers working on housing projects, as well as individuals suffering medical emergencies, moving to a residential care facility, or suffering a marriage breakup are also exempt from the new tax.
As well, if a spouse is required to have a second home which is closer to their place of employment by 100km, they will also qualify for the exemption. Several other minor exemptions are also available.
Homeowners in the designated areas will receive forms in the mail in February 2019, at which time they will have to declare whether the property is their primary residence. If it is rented out, they will have to declare the length of time it was rented out in the year.