REAL ESTATE BOARD OF GREATER VANCOUVER - The deadline to complete the annual declaration to claim an exemption for the provincial government's Speculation and Vacancy Tax is coming up on March 31.
Bill 45: Budget Measures Implementation (Speculation and Vacancy Tax Act) was introduced in the legislature on October 16, 2018. The name of the tax has changed since it was first proposed in the February 2018 provincial budget. Legislation is in place and received royal assent (became law) on November 27, 2018.
The tax will apply in these designated taxable regions of BC:
For 2018, the tax will be 0.5 per cent of a property’s assessed value for all properties subject to the tax in the designated taxable regions.
For 2019 and subsequent years, the tax will be levied at:
Residential property owners in the designated taxable regions will have to complete an annual declaration to claim exemptions. If there are multiple owners of a home, each owner must complete a declaration by March 31.
Information on how to declare has been mailed to residential property owners within the taxable regions.
Are there exemptions?
There are exemptions for principal residences and long-term rentals.
Exemptions are also available for:
LIST OF EXEMPTIONS
Principal residence exemptions
An owner is exempt on their principal residence. Owners with multiple homes must determine which home is their principal residence. Couples are deemed to have one principal residence for the purposes of the tax. To be eligible for this exemption an owner must be a Canadian citizen or permanent resident who is a BC resident for income tax purposes and isn’t part of a satellite family.
Others eligible for the principal residence exemption:
Rental exemptions are available for homes occupied by tenants. To qualify, the home must be occupied for at least six months of the year in increments of one month or longer. For 2018, tenants need to occupy for only three months in increments of one month or longer for the owner to qualify for this exemption. Only one residence must be rented for the property to be exempt.
Exemption for hazardous or damaged property
Owners of a property may claim an exemption if a residence is uninhabitable due to a hazardous condition or the property has been substantially damaged or destroyed. The property must have been uninhabitable for at least 60 days in the year. This exemption is available in the year the property became uninhabitable, and in the following year if the property remains uninhabitable for at least 60 days in the second year.
Medical exemption for second home
Owners are exempt for a calendar year on a secondary residence if it is periodically occupied by the owner (or owner’s spouse or child) to obtain treatment needed in the opinion of a medical practitioner, and the treatment facility is in close proximity to that second home.
Year of acquisition exemption
Owners are exempt in the year they buy a property if the transaction was exempt from property transfer tax for one of these reasons:
Spousal separation exemption
Married couples, or common-law spouses living together in a marriage-like relationship for at least two years, are eligible for an exemption on family property if they have separated and live apart (due to a breakdown in a spousal relationship) for at least 90 days in a tax year.
An owner or a trustee in bankruptcy is exempt from the speculation and vacancy tax if the owner’s property has vested with the trustee for at least 60 consecutive days in the year, or is vested with the trustee in bankruptcy on December 31.
Exemption upon death
If an owner of a property dies in a taxation year, all owners of the property at the time of death are exempt in the year of death and the immediately following tax year. The owner’s personal representative is also exempt, even if they weren’t on title at the time of the death.
Exemption for testamentary trusts for minors
The speculation and vacancy tax does not apply to property held in trust for a minor child, if the trust was established by a deceased parent or guardian of the child.
Exemption for properties with rental restrictions
All owners of a property where a covenant or a strata bylaw prevents the property from being rented out in a manner that would allow a rental exemption are exempt for the 2018 and 2019 tax years, if the rental restriction was in place on or before October 16, 2018.
Exemption for strata accommodation unit
Units in strata hotels are exempt for the 2018 and 2019 tax years.
Licensed daycare exemption
Properties that are used as licensed daycares are exempt from the speculation and vacancy tax.
Vacant land exemption
The speculation and vacancy tax will not be levied for the 2018 tax year for land that contains no residential property.
Other exempt properties and entities
Other exempt properties and entities include:
Exemptions for land under development
Owners of property under construction or substantial renovation are exempt if reasonable steps are taken without undue delay to develop or renovate the property. These exemptions cover phased developments, vacant new inventory (unsold units in a building) and heritage properties undergoing conservation work. To be eligible for the exemption, the owner must be carrying out eligible building activity. “Building activity” is defined to include the following types of activities:
The following exemptions are available to eligible owners who own land that’s under development:
Exemptions for Corporations, Trustees and Partners
Corporations, trustees, and parters that own residential property may be exempt. To be eligible for a principal residence exemption, a corporation, trustee or partner must take account of its corporate interest holders, beneficial owners or partnership interest holders:
Generally, corporations, trustees or partners can also claim other exemptions in a similar manner, providing their corporate interest holders, beneficial owners or partnership interest holders meet the same requirements that individual owners would need to meet.
Tax credits include:
All revenues will be directed to affordable housing projects in the impacted regions.
Amendments to the legislation from the Green party are expected.
Read Frequently Asked Questions.
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BC Real Estate Association lobbied for exemptions to this legislation. Thanks to their work, the exemptions listed were enacted as part of the legislation.
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