Do you want content like this delivered to your inbox?
Share




Share

Navigating BC’s Real Estate Speculation Tax

AJ Hazzi, REALTOR®

After becoming a Realtor® in 2002, AJ Hazzi noticed a gap in the real estate market...

After becoming a Realtor® in 2002, AJ Hazzi noticed a gap in the real estate market...

Mar 13 6 minutes read

About The BC Real Estate Speculation Tax | How it Works and 6 Ways to Avoid Paying It

The British Columbia Government recently introduced the new home speculation tax in an attempt to cool off BC’s booming housing market. Starting this year, BC residents who own a second home that is not being rented out for at least 6 months of the year will be liable to pay a 0.5% speculation tax on their homes assessed value. Foreign owners face a much higher 2% tax rate. 

I am yet to meet anyone who’s excited about this new tax that our provincial “leaders” have rolled out, but this is not going to be a rant about how poorly conceived the tax was, or that it ought to be rolled back.

This post is about recognizing that for the time being - it’s a thing. So what can we do if we are affected by the new speculation tax? 

This post shows you 6 great ways to navigate the potentially onerous BC Home Speculation Tax - without giving up your piece of hard-earned Okanagan paradise. 

What are my options?

1. Rent out at least one residence in a building 

If the home has a suite, carriage home, or the potential to add one, the owner can avoid the tax on the whole building by renting out at least one residence in the building.  This option allows you to generate some rental revenue, save the enormous tax bill and keep your main living quarters available to you at all times.

2. Let a family member occupy the property, or at least one residence in the building 

Homeowners can qualify for an exemption under the “non-arm's-length tenant” rule by letting a family member occupy the property or legal suite as their primary residence. The family member does not need to have a written rental agreement in place or pay any rent.

3. Provide vacation rentals for at least 6 months of the year 

If the property is truly a vacation home for you, then why not consider making it available as a premium furnished rental for the months of the year that you’re away? You can offer a fixed-term tenancy to an executive or somebody who is building a house. Allow 6 total months of rentals, and you will save the tax bill and make some income.  

Tenants at this caliber are well screened and generally take excellent care of the property.  You’ll return to a professionally cleaned home and rest assured - your own bedding and towels needn’t be used.

4. Bring on a Live-In Caretaker 

Another option is to offer a discounted rental rate in exchange for a caretaker to occupy a portion of the home, or all of it.

In the interest of maintaining your home’s value, caretaker duties should be completed on your property in any event – either by the homeowner, or by hired help while you’re away. By letting a live-in tenant maintain your property, you save the spec tax, maintain your property’s value, and generate some additional rental revenue.

5. Move to a non-taxable region 

If the above options won’t work for you – or if you just can't stomach the idea of anyone but you living in your home – you could consider a lateral move to a municipality that is not in a taxable region

There are some great options up and down the lake from Kelowna: to the south we have Peachland, Summerland, and Penticton; and to the north there’s Fintry, Lake Country and Vernon.  In fact, in each of these areas, you could very likely sell your Kelowna home, purchase an equivalent property, and pocket some extra cash in the process. 

We’re offering a rebate program for property owners choosing to take this route.  We don’t think it’s fair that you should get hit with expensive selling costs while trying to avoid this punitive tax.  Contact us for more information.  

6. Relocate to Leasehold Land 

If you absolutely must stay in Kelowna or West kelowna, there is one other option available.  Single family homeowners can relocate to properties that are on First Nations owned leasehold land. There are some terrific options in West Kelowna Estates, Lakeview Heights and in Westbank.  Moving to lease land often comes with the added benefit of not having to pay a property transfer tax.  And if strata living is on the menu, you can strategically select a strata that doesn't allow rentals; this however, may not last forever.   

Co-op titled properties are also exempt.  For a list of properties that are located in Kelowna but are exempt from the spec tax, get in touch with us here.

So there you have it, 6 ways to navigate around the speculation tax.  It’s not the time to have a knee jerk reaction or write off BC entirely (although I can understand the temptation). 

It’s time to act strategically

If you need help with any of these BC home speculation tax strategies, I invite you to reach out. We can connect you with the very best property managers or real estate consultants in the business.  

*Important reminder that each and every Kelowna and West Kelowna property owner is responsible to apply for the exemption in time or be subject to the tax - regardless of whether or not you would have been exempt.  

It will be up to all homeowners to apply for exemptions, with the deadline on March 31st, 2019. Property owners will receive a speculation and vacancy tax declaration letter from the provincial government this February. Those who don’t apply, or who don’t qualify, will be sent tax bills due to be paid by July 2nd.

  

Questions?

We're here to help!

Request a Call
We use cookies to enhance your browsing experience and deliver our services. By continuing to visit this site, you agree to our use of cookies. More info

Terms of Use

This website is operated by Vantage West Realty Inc./AJ Hazzi, REALTOR®, a Brokerage who is a member of The Canadian Real Estate Association (CREA). The content on this website is owned or controlled by CREA. By accessing this website, the user agrees to be bound by these terms of use as amended from time to time, and agrees that these terms of use constitute a binding contract between the user, Vantage West Realty Inc./AJ Hazzi, REALTOR®, and CREA.

Copyright

The content on this website is protected by copyright and other laws, and is intended solely for the private, non-commercial use by individuals. Any other reproduction, distribution or use of the content, in whole or in part, is specifically prohibited. Prohibited uses include commercial use, “screen scraping”, “database scraping”, and any other activity intended to collect, store, reorganize or manipulate the content of this website.

Trademarks

REALTOR®, REALTORS®, and the REALTOR® logo are certification marks that are owned by REALTOR® Canada Inc. and licensed exclusively to The Canadian Real Estate Association (CREA). These certification marks identify real estate professionals who are members of CREA and who must abide by CREA’s By-Laws, Rules, and the REALTOR® Code. The MLS® trademark and the MLS® logo are owned by CREA and identify the professional real estate services provided by members of CREA.

Liability and Warranty Disclaimer

The information contained on this website is based in whole or in part on information that is provided by members of CREA, who are responsible for its accuracy. CREA reproduces and distributes this information as a service for its members, and assumes no responsibility for its completeness or accuracy.

Amendments

Vantage West Realty Inc./AJ Hazzi, REALTOR® may at any time amend these Terms of Use by updating this posting. All users of this site are bound by these amendments should they wish to continue accessing the website, and should therefore periodically visit this page to review any and all such amendments.