Owners of vacant second homes in Chilliwack could be hit with a multi-thousand-dollar bill this year as the province’s speculation tax is a reality.
B.C. Finance Minister Carole James delivered on her promise to impose a speculation tax on homes that sit vacant more than half of the year, focused on urban areas with high housing prices and low rental vacancy rates.
— Tom Fletcher (@tomfletcherbc) October 16, 2018
Beyond Metro Vancouver (except Lions Bay and Bowen Island) and Greater Victoria, the tax applies to the municipalities of Nanaimo, Lantzville, Abbotsford, Chilliwack, Mission, Kelowna and West Kelowna.
It is to take effect based on 2018 assessed property values, at 0.5 per cent for B.C. residents, one per cent for Canadians whose principal residence is outside B.C., and two per cent for foreign owners and “satellite families” who don’t pay income tax in B.C.
For B.C. residents, that means a $2,500 tax bill on a $500,000 property.
The province is, however, using the strict city limits of Chilliwack, which means vacation property owners in the Chilliwack River Valley, Cultus Lake, Lindell Beach and the Columbia Valley will be exempt.
There are a number of other exemptions regarding medical conditions, disability, spousal separations, bankruptcy, death, and a number of rental exemptions.
The introduction of the tax bill prompted an immediate demand from the opposition to scrap the tax. B.C. Liberal leader Andrew Wilkinson referred to mayors who objected to the tax at the recent Union of B.C. Municipalities (UBCM) convention, calling it a “fake” tax that has targeted mostly B.C. residents and caused new housing developments to be cancelled.
It was at the UBCM convention on Sept. 12 when delegates approved a motion by Oak Bay to replace the speculation tax with one that would empower municipalities to bring in their own vacant home taxes.
“The value of letting local governments do it, is first of all we know best, second of all we can use that money for affordable housing in our community or in our regions,” Oak Bay Mayor Nils Jensen told Black Press.
James said she has met with mayors who called for the tax to be a local decision, and she’s moving ahead.
“We’ve seen examples of families being forced to live in tents, workers and seniors living in their cars and professionals leaving this province,” James told the legislature. “As a result, businesses can’t find the workers they need to keep our economy growing.”
James rolled back the extent of the tax in March after protests from vacation homeowners, exempting the Gulf Islands, Parksville, Qualicum Beach, the Juan de Fuca region in Premier John Horgan’s constituency and rural areas of the Fraser Valley and Central Okanagan.
James has stressed that people can avoid the tax by renting out their second residence for half the year or more.