For properties owned on December 31, 2018, the tax rate was the same for everyone: 0.5% of the assessed value of your residential property on July 1, 2018, as determined by BC Assessment. B.C. owners are eligible for a tax credit of up to $2,000 on secondary properties to offset their tax payable. The credit is limited to $2,000 per owner and $2,000 per property (in the case of multiple owners) per year.
For 2019 and onwards, the speculation and vacancy tax rate will vary, depending on your residency and where you pay income tax:
2% for foreign owners and satellite families
0.5% for British Columbians and other Canadian citizens or permanent residents who are not members of a satellite family
The speculation and vacancy tax applies based on ownership as of December 31 each year.
A satellite family is an individual or spousal unit where the majority of their total worldwide income for the year is not reported on a Canadian tax return.
If a residential property has multiple owners, tax is divided among each owner based on their ownership share. For example, if you and your spouse are equal owners of a residential property in a taxable region, you’ll each owe tax on 50% of the home’s assessed value.
A corporation, trustee or partner will pay tax at the highest rate that would be applicable to any of the corporate interest holders, beneficial owners or partnership interest holders if they held the residential property individually.
Most B.C. residents who own only one home should be exempt. However, everyone within the designated taxable regions of B.C. must complete an annual declaration for an exemption or the tax will be payable.
If you have to pay the speculation tax and do not fit into any of the exemptions, you should review whether the annual tax is something you are happy to pay. The only real options being disposing of the property or renting it out (long term).
Principal residence exemption
Unlike the income tax act, owners cannot choose which of their homes is their principal residence. In order to claim the principal residence exemption homeowners need to claim as their principal residence the place where they reside for most of the year. This could even be your vacation home.
The speculation tax also doesn’t allow foreign owners or members of a satellite family to claim a principal residence exemption. For example:
When you complete your declaration for the speculation and vacancy tax, the declaration takes into account where in the world the majority of your combined spousal income is reported.
People who declare LESS than 50% of their total combined household income for the year on Canadian income tax returns may pay tax at the highest rate and may not be entitled to all exemptions. People in this situation are considered members of a satellite family. This could apply to you even if you are a Canadian citizen or B.C. resident e.g. one spouse is a Canadian citizen but isn’t the home owner, while the other spouse is the owner but isn’t a Canadian citizen or permanent resident. Around 70% of their combined worldwide income is earned outside of Canada and is not reported on a Canadian income tax return. Both spouses are members of a satellite family.
One spouse owns the home but is out of the country most of the time, earning 100% of his income from outside Canada with no obligation to report to Canada Revenue Agency. The other spouse and their children live in their B.C. house. Since the combined income of these two spouses is entirely unreported on Canadian tax returns, they are both considered members of a satellite family.
If you aren’t eligible for any of the speculation and vacancy tax exemptions, you may be eligible for a tax credit to reduce the amount of tax you have to pay.
If you’re a B.C. resident, you can receive a maximum tax credit of $2,000 that can be applied to one or more properties each year, if you meet the qualifications.
If you’re not a B.C. resident, or if you’re a member of a satellite family or a foreign owner, your credit amount is based on the B.C. income reported, if you meet the qualifications. Corporations and trusts may also claim this tax credit if they meet the qualifications.
Both tax credits are non-refundable.
Exemptions are based on how each person uses each residential property. If you’re the co-owner of a residential property in a taxable region and are exempt, but the other owner isn’t exempt, the other owner will have to pay tax based on their percentage ownership of the residential property as listed with the Land Title Office.
In the case of a corporations and trusts. The speculation tax looks through to the beneficiaries of the trust and to the corporate interest holders. If not all of these persons are Canadian residents, the person who lives in the home can’t get a principal residence exemption.
Where does the speculation and vacancy tax apply?
Your residential property might be taxable if it’s located in one of these geographic areas (note, these are subject to change):
- Municipalities within the Capital Regional District. This excludes Salt Spring Island, Juan de Fuca Electoral Area and the Southern Gulf Islands
- Municipalities within the Metro Vancouver Regional District, excluding Bowen Island, the Village of Lions Bay and Electoral area A, but including UBC and the University Endowment Lands
- The City of Abbotsford
- The District of Mission
- The City of Chilliwack
- The City of Kelowna
- The City of West Kelowna
- The City of Nanaimo
- The District of Lantzville
Reserve lands, treaty lands and lands of self-governing Indigenous Nations are not part of the taxable regions.
Islands that are accessible only by air or water are not part of the taxable regions.
Some residential properties are excluded from the speculation and vacancy tax, even though they are located within a taxable region. These include residential properties owned by:
- An Indigenous Nation
- Municipalities, regional districts, governments and other public bodies
- Registered charities
- Housing co-ops
- Certain not-for-profit organizations
If you’re not sure if your residential property is in a taxable region, contact the speculation tax department at the Government of BC at:
Toll Free: 1 (833) 554-2323
Outside North America: 1 (604) 660-2421