Province removes Gulf Islands and RDN outside Nanaimo and Lantzville from speculation tax

Derek Kilbourn

Sounder News

Tuesday, April 3 2018

The BC Government has released details which look to exclude the Gulf Islands, as well as most of the Regional District of Nanaimo (RDN) from the proposed speculation tax.

Carole James, BC Minister of Finance, made the announcement last week while releasing details of the new tax on speculators (which was announced in the February budget.)

“Our government wants to make sure people who live and work here are able to find and afford a good home in their community,” said James. “For too long, this housing crisis was allowed to escalate, and it has hurt working families, renters, students, seniors and others around the province. With this new tax, we’re targeting speculation in the housing market and freeing up vacant housing to be homes for British Columbians.”

Bill Veenhoff, RDN Board Chair said, “The RDN is thankful and appreciative to the Honourable Minister James for not only taking the time to meet with us recently but for truly listening to our concerns and those of our residents, about the speculation tax initially proposed in the February 2018 budget.

“We are pleased that further consideration was given to how, who and where the tax will impact, and that the Province will continue to study the impacts of the tax.

“The RDN will continue to focus on improving housing affordability in our region and working with the Province on this important initiative. We will continue to work with and support our partner municipalities the City of Nanaimo and District of Lantzville who remain affected by the speculation tax.”

According to the Province, the tax details released contain a series of thresholds, exemptions and geographic refinements that serve to focus their reach on people who own multiple homes left empty in overheated markets, while making sure that British Columbians who own vacation properties are largely exempted.

James said, “The speculation tax focuses on people who are treating our housing market like a stock market.

“So people in smaller communities, those with cottages at the lake or on the islands, will not pay this tax. People with second homes outside of high-cost, designated urban areas will not pay the tax. We are going after speculators who are clearly taking advantage of the market, leaving homes vacant and driving up prices.”

The Province claims that once the tax is put in place, there will be a rate design that will see British Columbians who are subject to the tax paying lower rates than owners from outside the province in 2019 and beyond. 

Canadians from other provinces will have a rate of one per cent in 2019 and beyond, while foreign investors and satellite families will pay a two per cent rate.

“We have focused the geographic areas so this tax only applies in urban housing markets hardest hit by this crisis,” said James. “With so many people desperate to find good homes in these urban areas, we need to take every step we can to free up and create more housing opportunities.”

The tax boundaries now confirmed through the Province include only the City of Nanaimo and Town of Lantzville (for communities within the RDN).

The tax will also apply to Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna and West Kelowna, Nanaimo-Lantzville, and Abbotsford, Chilliwack and Mission.

In 2018, the tax rate for all properties subject to the tax is 0.5 per cent of the property value.

In 2019 and subsequent years, the tax rates will be two per cent for foreign investors and satellite families; one per cent for Canadian citizens and permanent residents who do not live in British Columbia; and 0.5 per cent for British Columbians who are Canadian citizens or permanent residents (and not members of a satellite family).

British Columbians with vacant second homes will be eligible for a non-refundable tax credit that is immediately applied against the speculation tax. This credit will offset a total of $2,000 in speculation tax payable. This tax credit will ensure that British Columbians do not pay tax on a second home valued up to $400,000.

The new guidelines also define a long-term rental as a property that is rented out for at least six months out of the calendar year in increments of at least 30 days. In 2018, a long-term rental is a property that is rented out for three months of that year.

There will be exemptions for homeowners facing special circumstances. These include:

The owner or tenant is undergoing medical care or residing in a hospital, long-term care or a supportive-care facility.

The owner or tenant is temporarily absent for work purposes.

The registered owner is deceased, and the estate is in the process of being administered.