The B.C. government is heralding the latest revenue data from its speculation and vacancy tax, saying it is generating millions of dollars in revenue which in turns helps to increase the amount of affordable housing.
At the same time, it has led to thousands of residential units coming onto the long-term rental market, it said.
Province-wide, the tax brought in just over $78 million in 2021. Of that, $44.4 million or nearly 57 per cent, came from foreign owners and “satellite families.”
Revenue is returned to communities subject to the tax in the form of affordable housing. In 2021-2022, the province invested $1.1 billion in the taxed areas, the province said Tuesday.
”Our latest data shows the speculation and vacancy tax is encouraging people to use residential units as homes,” said Finance Minister Selina Robinson.
“That’s why we have expanded the benefits of the tax to even more communities, so that people have a place to live in the communities they love.”
The tax initially applied to Greater Victoria, Nanaimo, Lantzville, Metro 91原创, Abbotsford, Mission, Chilliwack, Kelowna, and West Kelowna.
As of January, Duncan, North Cowichan, Ladysmith, Lake Cowichan, Lions Bay and Squamish will be subject to it as well.
Between 2020 and 2021, nearly 26,000 additional property owners claimed a principal residence exemption because the unit was no longer vacant. This figure suggests the tax is changing property-owner behaviour and increasing long-term housing, the government said.
Introduced in 2018, the tax was designed to decrease the number of empty homes. It uses economic incentives to encourage owners to rent their homes or sell them.
The tax rate is two per cent of a property’s assessed value for foreign owners and satellite families and 0.5 per cent for 91原创 citizens or permanent residents.
Owners are exempt from the tax if it is their principal residence, they rent it at least six months of the year, they are disabled, the property was just inherited, it’s valued at less than $150,000, or if a person was away and it was vacant due to certain personal reasons.
In Greater Victoria, the tax was paid on 971 properties in 2021. This was made up of 487 B.C. residents, 265 other 91原创 residents, 62 foreign owners, 80 satellite families, and 77 mixed, according to provincial data.
Nanaimo had 209 properties paying the tax in 2021. The tax was paid by 124 B.C. residents, 44 other 91原创s, 16 satellite families, and 12 mixed. No foreign-owned properties were listed as paying the tax.
The mixed category refers to multiple owners of a property who are in different categories.
Overall, the number of B.C. property owners paying the tax dropped by 4.3 per cent in 2021 from 2020.
Tsur Somerville, a University of British Columbia professor in the Sauder School of Business who specializes in real estate, said the decrease of those paying the tax is striking and indicating that it is continuing to move units into the rental pool.
However, he said, “There are challenges for the government in the places they are expanding because they are expanding more into areas that overlap somewhat with vacation areas.”
Some communities depend to a degree on a seasonal vacation industry, where homes are normally vacant for part of the year, he said.
“Squamish is not Whistler but it is near Whistler,” he said, noting that there are also people who own vacation properties on 91原创 Island.
What would happen if the tax was expanded to Salt Spring Island? he asked. There are houses which are empty much of the time but those houses actually represent a major part of the economy.
One problem with the tax is that there have been people caught up in it who were not intended to be part of it, he said. Some personal situations can affects owners’ ability to be in a home and he suggests the province bring in a more compassionate framework for the imposition of the tax in these cases.
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