Backtracking has begun! Earlier in the year when the B.C. Budget was announced, the NDP of British Columbia introduced their plan for a speculation tax. If you have not had a chance to read the first article written by Oake Mortgage on the topic, check it out here.
With broad areas being covered, and high tax rates for non-residents of B.C., the public call for changes was heard loud and clear. This past week the BC NDP updated the areas in which the tax will apply:
For the actual tax itself, every property that is vacant for more than 6 months in 2018 will be subject to a 0.5% tax based on the property's assessed value.
Foreign investors and extended family members will see that climb to 2% in 2019.
For Canadian Citizens who do not live in British Columbia or who are permanent residents, the tax rate would rise to one per cent of the property's assessed value in 2019.
B.C. residents living and paying income tax here will see their speculation tax remain at 0.5%. If the home is rented for 6 months or more of the year, there will be no tax. As well, a tax credit of up to $2,000 will be given to every B.C. resident with a second home valued up to $400,000. This will off-set any property's potential tax up to an assessed value of $400,000.
The goal with this Speculation Tax remains the same- to charge investors who treat the housing market in over stimulated areas as cash vehicles for holding their money like a stock market, while at the same time tying up supply in an over-demanding province.