B.C.'s speculation tax increasing from 0.5% to 2% by end of year

The B.C. government has announced it is raising the Speculation and Vacancy Tax on Dec. 31 from 0.5 per cent to twoper cent for foreign owners and for satellite families, the majorityof whose income isnot reported on a Canadian tax return.

Some new exemptions to the tax will be brought in while otherscurrently in place will be phased out.

"When we introduced the Speculation and Vacancy Tax, our province was at the peak of a real estate crisisand moderation in the market was long overdue," said Finance Minister Carole James.

Based on the data collected from the first year, the government saysthe tax is working as it was designed to capturing speculators, foreign owners and people who own vacant homes.

The next phase of the tax brings:

• An exemptionfor property owners who are members of the Canadian Armed Forces while in active service and their spouses.

• An exemptionfor people who own properties which are only accessibleby water.

• An end on Dec. 31, 2019, to the exemption for foreign owners of vacant land.

The exemption for empty strata properties in buildings where rentals are bannedwill be phased out by Dec.31, 2021.

A strata title allows individual ownership of part of a property generally either an apartment or townhouse with shared ownership in the remainder of the building.

Under the new rules announced Tuesday, if the strata lotremains unoccupied, even if the building'sbylaws prohibit rentals,the tax will be levied.

IntroducedDec.31, 2018, the tax targets homes in the most populated areas of B.C. that are not declared as a primary residenceor are not rented out for at least three months a year.More than 99 per cent of British Columbians are exempt.

"I recognize there are a variety of views on the Speculation and Vacancy Tax," said James.

"There are those who oppose the tax and others who want to implement additional tax. I look forward to continuing discussions as we work together to tackle the housing crisis," she said.

The province isincreasing identification and other information required of foreign owners, corporations and trustsin its applications for exemption changes aimed at improvingcompliance and preventing tax avoidance.

The Finance Ministryestimates foreign owners brought in$115 million since the tax was introduced money the province saysgoes to fund affordable housing projects.

In September, James said the tax has been paidby 11,783 property owners, representing9,386 properties.