On December 10, 2019, the B.C. government announced new changes to the Speculation and Vacancy Tax (the "SVT"), following its inaugural year.
These changes are timely, as homeowners are set to receive their 2019 tax declaration notices for the SVT in just a few weeks' time.
As discussed in our previous blog post on the SVT, the tax rate for properties owned by a foreign owner or a member of a satellite family1 that are not subject to an exemption will increase to 2% for the 2019 tax year. The general tax rate for non-foreign owners or members of satellite families will remain at 0.5% of a property's assessed value.
Once these new announced changes come into force, homeowners are expected to be able to claim two new exemptions to the SVT for the 2019 tax year, and some homeowners may even be eligible to amend their 2018 declarations:
- a retroactive exemption is being added for homeowners, and their spouses, who are members of the Canadian Armed Forces in active service; and
- a retroactive exemption is being added for homeowners whose properties are accessible only by water.
Additionally, some popular exemptions that were scheduled to be phased out this year will now continue to be available for some homeowners to claim:
- the exemption for vacant properties in strata buildings with rental restriction bylaws can now be claimed until the end of 2021 (previously scheduled to be phased out at the end of 2019)2;
- the exemption for vacant strata accommodation properties (i.e. strata hotels) can now be claimed until the end of 2021 (previously scheduled to be phased out at the end of 2019); and
- the exemption for vacant properties can now be claimed for the 2019 tax year (previously scheduled to be phased out at the end of 2018).
The extension of these exemptions will provide homeowners more time to make important decisions on what to do with their vacant properties.
As the draft legislation with these proposed changes is not yet available for public viewing, we do not yet have further details about these changes. We also do not know if there will be additional changes made to the SVT that have yet to be announced. We will continue to monitor the B.C. Legislative Assembly and BC Laws websites and will update this blog post once further details are available.
1. Individuals who declare less than 50% of their total combined household income for the year on Canadian income tax returns are considered members of a satellite family. More information can be found on the BC government's website: www2.gov.bc.ca.
2. This exemption only applies if the rental restriction strata bylaw was in place on or before October 16, 2018. The extended exemption for the 2020 and 2021 tax years is only available to homeowners who purchased their properties prior to October 16, 2018.
Please see the Ministry of Finance's news release here.
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