Home owners from within and outside of B.C. are rapidly signing up to a petition that is aims to fight the provincial government’s recently announced speculation tax.
The new tax, which the finance minister Carole James said is intended to prevent speculation on real estate, also applies to anyone who owns a second home in the province and doesn’t rent it out long-term, including vacation properties.
The annual tax, which was announced in the recent B.C. Budget, is 0.5 per cent of the home’s assessed value in 2018 and 2 per cent a year thereafter – so it would be $20,000 a year on a $1 million home. Only principal residences and long-term-rented properties are exempt. The tax applies to homes in Metro Vancouver, the Fraser Valley, the Capital and Nanaimo Regional Districts, Kelowna and West Kelowna.
For people who live in B.C. and pay income tax, if they have a second home that is liable for the tax, they can use a credit for the amount of provincial income tax they pay to help pay their speculation tax bill. This will “help offset” some of the cost of the new tax, according to the B.C. government’s Tax Information Sheet.
The offsetting system has been criticized as benefitting high-earners who pay high income tax and can therefore offset more of their bill, but would be able to pay a higher bill. This compares with seniors or those on low incomes who have little provincial income tax to offset their speculation tax bill, and may not be wealthy but have a second home in the family.
For those living outside of the province, and have a second B.C. home in their family that they do not rent out long term, there are no exemptions.
The couple who launched the petition, who currently live in Alberta but one of whom is from Coquitlam, have long had an Okanagan home in their family, spend many summers in the region and hope to retire there.
The petition website reads, “We do not want to leave our home but we cannot afford the ‘speculation’ tax... If we sell, and we would have to, we not only have to abandon our dream vacation home but we take all of our spending with us. Who will buy our home? A B.C. resident? Maybe, or maybe an actual speculator.”
As of Thursday March 8, 10.30am, their “Stop BC’s Speculation Tax” petition had more than 3,300 signatures.
The petitioners may get their way. According to the Canadian Press the finance minister was dropping hints Wednesday that the speculation tax may be revised due to the B.C. home owner backlash.