Last Updated on October 24, 2023 by Neil Sharma
The British Columbia government introduced a speculation and vacancy tax this week, sparking fears that it will stymie investment in the province.
The would impose a tax of either 0.5%, 1% or 2%, depending on the assessed value of a vacant property in the 2019 taxation year and onwards. For the 2018 tax year, the all properties subject to the tax will be 0.5%.
“In a nutshell, it’s not going to achieve what the government is trying to achieve,” said David Peerless, David Peerless, president of Dexter Associates Realty. “I think if you’re a property owner in British Columbia or Canada, it has quite a few flaws that target people who work hard for the right to buy a bit of property, but secondly, it seems to target people outside of the province in a more punitive fashion for investing in British Columbia. That’s a real problem for people who own and invest in British Columbia because it puts a damper on anybody wanting to invest in a second property in B.C.”
The tax doesn’t apply to the entire province, either. Only select areas, namely Vancouver, will be subject to the tax, which confounds Michael La Prairie, president of Century 21 In Town Realty.
“People have the right to invest their money, but why is the government dictating what you can and can’t do with your properties?” said the Vancouver-based La Prarie. “Why is Whistler exempt? The politics just suck in this province now. They’re taxing everybody on everything and they’re making people not want to invest in this province.”
The inconsistency in the way in which the tax is applied throughout B.C. will dissuade investors from spending money in the province, fears Peerless.
“The problem with that kind of inconsistency of taxation is it will also send a message to anybody wanting to buy real estate in the province that there’s not a consistently applied tax province-wide and that will damper the interest that other Canadians and other investors have in buying B.C. real estate.”
The tax has also resulted in confusion over and Peerless has noticed people offloading properties before taxes are due.
“We’re seeing some people choosing to sell before the tax is defined,” he continued. “They may not have to sell, but uncertainty causes a great deal of stress and we’re looking at people who are going to sell at a loss because of that uncertainty.”
With files from The Canadian Press
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
