The cost of housing in British Columbia has skyrocketed in recent decades. Canadian citizens and residents who simply want an affordable place to call home are priced out of many urban areas.
As an intervention measure, the BC government addresses this crisis by instituting an annual speculation and vacancy tax designed to encourage people to turn more vacant properties into rentals. The speculation tax’s goals are to reduce housing speculation in BC and to discourage people from maintaining vacant homes in urban areas of British Columbia.
What Is the British Columbia Speculation Tax?
The BC speculation and vacancy tax is the annual tax paid by homeowners whose properties are located in the taxable regions of British Columbia, which include many of the province’s urban areas. Within these regions, any treaty lands, self-government First Nations, and reserve lands are exempt. In 2023 new areas on Vancouver Island have been added to the existing lower mainland and Okanagan cities.
If you own property in any of the taxable regions of BC you must fill out an annual declaration to tell the government about your residency status and describe how your property is being used. If you are expected to complete a declaration, you will receive a declaration letter from the BC government informing you of your obligations. All homeowners in taxable regions must complete the declaration form every calendar year, even if you’re exempted from the tax.
The proceeds from the tax contribute towards the implementation of initiatives to support affordable housing and transform empty residential properties into quality, affordable homes for BC residents.
Speculation tax rates
The speculation and vacancy tax was introduced in 2018. At that time property owners in taxable regions had to pay an annual tax based on 0.5% of their property’s assessed value. In 2019, the rates were changed. For that year and subsequent years they have been 2% for satellite families and foreign owners, and 0.5% for Canadians and British Columbians or permanent residents who don’t belong to a satellite family.
The rates for trustees, business partners, or corporations is higher than those for residential property owners.
If the residential property is co-owned, any owned tax shall be divided among the owners based on the ownership share. For instance, if you co-own a residential property in equal shares, both owners must contribute tax on 50% of the home’s assessed value.
Those who must pay the speculation and vacation tax may be able to get a tax credit to reduce the amount of tax they owe.
The exemptions of speculation tax
Almost all of BC residents are exempt from the speculation and vacancy tax.
In 2018, BC residents were exempted from the speculation and vacancy tax if they lived in their properties as a primary residence or rented out a home that wasn’t a principal residence for at least three months in the year. However, these rules changed in 2019. Now, if you have a home that’s not a principal residence, it must be rented for at least six months if it is to be exempted from the tax. Any short-term rental period of less than one month cannot be counted as part of this six-month total.
Exemptions are also available for situations such as divorce, extended absence, or hospitalization. And some particular types of residential properties are exempt from the speculation and vacancy tax—those that are owned by:
- Municipalities, governments, regional district, and other public bodies
- Housing co-ops
- Some not-for-profit organizations
- An Indigenous nation
- Registered charities
To claim your exemption, ensure that you file the declaration every year. You’re liable to pay speculation tax if you miss submitting the declaration in time.
How to complete a BC speculation tax declaration
If you’re a residential property owner in major urban regions in British Columbia, you must complete the speculation tax declaration. This should be done by March 31 of each year. Ensure you declare each year even if there are no changes to your information.
If the property is co-owned, each owner needs to make a separate declaration, whether the other owner is a relative or spouse. There might be some special instances to consider, such as if the owner is out of town or deceased during declaration time.
You can declare your speculation tax over the phone or online. The online declaration is considered easy, fast, and seamless.
For individual declaration, you’ll need:
- Your date of birth
- Social insurance number
- The speculation and vacancy tax declaration letter
Service BC will verify your identity using your date of birth and SIN. Your personal information will be encrypted for maximum security and safety. The declaration letter will be sent to your mailing address, in February at the latest.
If you are not available to receive the declaration letter when it arrives, contact Service BC to help you submit the declaration on time. The letter contains:
- A detailed list of residential properties you own in taxable regions
- The declaration code, letter ID, and other necessary information needed for declaration
Take note of important dates for the declaration of the speculation and vacancy tax.
- Opening of declaration period: January 20
- Declaration due date: March 31
- Notice tax mails: April-May
- Tax payment due date: first business day of July
How can the BC speculation and vacancy tax be avoided?
Along with getting one of the typical exemptions, you can avoid the speculation and vacancy tax in a number of ways. If you own a vacant home – get a tenant. The current law does not apply to properties in the year they are purchased, so if you buy a home and sell it again within the same calendar year, you won’t be subject to the speculation tax. (But, you will be subject to the new anti-flipping tax on selling properties within 1 year of purchase)
Additionally, properties that you can only get to via boat or plane are not considered to be in taxable areas, with the exception of Vancouver Island.