Some homeowners in the City of Vancouver will end up paying two taxes aimed at discouraging the use of homes as investments rather than places to live.
It’s not clear yet how many will be on the hook for both the city’s empty homes tax of one per cent of a home’s assessed value and the province’s speculation tax, which starts at 0.5 per cent of assessed value, minus $2,000.
For owners of an empty or lightly used $800,000 Vancouver condo, for example, it’ll mean paying $8,000 for the empty homes tax and another $2,000 for the speculation tax.
In early March, the City of Vancouver said there were 8, 481 residential properties that were unoccupied or under-utilized for more than 180 days in 2017, but that included 2,132 properties for which a status had not yet been declared. It also included two categories of unoccupied or under-utilized properties that will qualify for an exemption from the empty homes tax because the homes were being renovated, redeveloped or transferred, or the owner was in a hospital or care facility.
At the time, the city said it would, by mid-March, issue a bill for the empty homes tax to declared and deemed vacant properties with payments due April 16.
It anticipates making public the number of owners who have to pay the empty homes tax in late April, declining to give even a ballpark figure of the number of households it has presumably invoiced by now or an estimate of the dollar amount the tax will raise.
The province’s definition of a long-term rental property that is exempt from the speculation tax is one rented for at least six months out of the calendar year in increments of at least 30 days. The city’s definition is similar at 180 days.
The city’s empty homes tax is designed to encourage owners to rent out empty or lightly-used units. The speculation tax does that too, but it also has a sliding scale of higher taxes aimed at stemming offshore capital from foreign investors and so-called satellite families who want to own empty or lightly used properties.
Asked to comment on the overlap of these two taxes for some homeowners in Vancouver, the B.C. Ministry of Finance said its “speculation tax is broader than the City of Vancouver’s empty home tax in targeting foreign and domestic speculators.”
The B.C. speculation tax will be phased starting in 2018.
The 0.5 per cent speculation tax will apply if the owner lives in B.C., is a Canadian citizen or permanent resident, and is not part of a so-called satellite family — one that earns a high worldwide income, but pays little or no income tax in B.C.
For owners who are Canadian citizens and permanent residents who do not live in B.C., the tax is one per cent of assessed value, minus the credit — or $6,000 for an $800,000 Vancouver condo.
For owners who are foreign investors or part of satellite families, the tax is two per cent of assessed value, minus the credit — or $14,000 for the $800,000 condo.
“Many speculators might simply eat that cost and not list or rent their units,” said Josh Gordon, public policy professor at Simon Fraser University’s School of Public Policy.
“We need to remember that we are in the midst of a housing crisis with very low vacancy rates and there are a lot of people in precarious or uncomfortable situations. Attempts to free up housing stock in many of the communities, especially from people who are parking wealth in speculative assets, should be welcomed.”
Source: The Vancouver Sun. http://vancouversun.com/business/local-business/b-c-and-vancouver-home-taxes-some-in-the-city-will-pay-twice