The Speculation Tax Roll-Out

It’s the new year, so all those new provincial taxes that were pushed through the NDP-controlled legislature last year are now coming to life. One of the most controversial of these is the speculation tax, which requires anyone who owns a home that is left vacant for all or most of a year to pay an extra several thousand dollars in taxes. The idea is to curb foreign speculators who dump their money into our real estate market, causing our neighborhoods to lose character and our housing prices to shoot through the stratosphere.

As we’ve pointed out before, the tax that was actually passed and is now on the books isn’t really a “speculation tax” per se – it’s a “non-resident owner tax” that will most likely do little to keep those greedy foreign speculators away. Any property owner that doesn’t pay B.C. income tax will pay 2% of the property value annually starting this year, provided they don’t live in or rent out the home. So long-term, non-resident owners, of which there are many, will have to pay this tax year in and year out, whereas actual speculators, who want to flip properties quickly, will only have to pay it once.

Daniel Greenhalgh, ENM co-founder, believes that of the 5-7% of B.C. homes that sit empty, a big portion of them are owned by permanent residents who need to maintain their status. This may be an exploitation of the immigration system, but it’s not a distortion of the housing market.

“I think the notion of foreign buyers destroying our housing market is greatly overblown,” says Greenhalgh. “Very few large investors do property speculation, especially in Langley or anywhere outside of Vancouver. But this tax applies all over the province. The better approach to bringing housing costs down is to reduce the cost to build. These experimental taxes, which have so many unintended consequences and hurt so many honest people, are just seriously misguided.”

And with the rollout in progress, we’re learning that the province’s method of collecting this tax may cause even more problems for those honest people. It turns out that, unless you prove you’re exempt, you’re going to be hit with the tax. You’re going to need to spend some time and effort filling out an online form proving you’re not a speculator. This means that EVERYONE, all 1.6 million homeowners, will get a tax notice to winnow out the roughly 32,000 who will need to pay up.

The NDP calmed a lot of fears with their claim that 99% of B.C. homeowners wouldn’t have to pay this tax. But with this expensive, very inefficient method of tax collecting, which will inevitably cause some honest but clueless homeowners to accidentally send in a check, that support is dwindling a bit.

So if you got one of these notices, be sure and send it back by March 31. Be sure your spouse does too, or anyone else on the deed, because every owner has to file a separate declaration. Yes, you’ve already provided this information to the province through the homeowner grant application on your property tax notice, and with a few extra lines of code, they could probably spare us all this headache – but don’t let it slip your mind. It could cost you a few thousand dollars.