The week’s top stories focus primarily on Speculation and Vacancy Tax, in effect for the 2018 tax year. As declaration letters begin to arrive to homeowners beginning today, residents and politicians of the affected regions have spoken on their views towards the tax and exemptions.
Here is Western Investor’s pick of the top real estate stories published this week.
All property owners in Speculation and Vacancy Tax regions must complete declaration – Western Investor
Every homeowner in affected areas will get declaration letters between January 18 and February 28, and must apply for exemption or pay up.
The Speculation and Vacancy Tax has come into force for the 2018 tax year, and homeowners can expect to get declaration letters from tomorrow (January 18) until the end of February.
All homeowners – not just owners of second or vacation homes – in applicable regions of B.C. can expect to receive a declaration letter. They have until March 31 to complete their declaration and apply for an exemption if applicable.
The declaration will establish whether the home is being used as a primary residence or being rented out at least six months of the year. If one of those requirements is met, the property is exempt from the Speculation and Vacancy Tax. Other exemptions are also applicable for individuals, land under development or corporations.
In most cases, for a non-primary residence that is not rented out at least six months of the year, an annual tax of 0.5 per cent of the home’s assessed value is applicable. Owners who are liable for the tax will have until July 2, 2019 to pay their 2018 bill.
Homeowners who do not complete their declaration, even if their home is exempt from the tax, will receive a tax notice of assessment after April 1 charging the full tax rate.
The affected regions in B.C. are:
- Municipalities in the Capital Regional District, excluding Salt Spring Island, Juan de Fuca Electoral Area and the Southern Gulf Islands
- Municipalities in the Metro Vancouver Regional District, excluding Bowen Island, the Village of Lions Bay and Electoral Area A, but including the University of British Columbia 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
Finance Minister Carole James on speculation tax: ‘I think a bit of politics is going on’ – Times Colonist
James says detractors of the government’s speculation tax exemption are “playing politics” in advance of Nanaimo’s provincial byelection.
B.C.’s finance minister said detractors of the government’s speculation tax exemption are “playing politics” in advance of Nanaimo’s provincial byelection. Winning the byelection is crucial for the NDP minority government’s hold on power.
“We’re in the middle of a byelection, I think a bit of politics is going on right now,” said Carole James, in response to the criticism that followed the government’s announcement Tuesday that homeowners in urban centres will have to apply for exemptions to avoid paying the speculation tax.
Tony Harris, the B.C. Liberal candidate in the Nanaimo byelection, which is set for Jan. 30, said the exemption “is a botched implementation of an already reckless tax.”
Harris has advocated for cancellation of the speculation tax, which he said is slowing development in Nanaimo and affecting jobs. He said the onus should not be on taxpayers to prove they’re not speculators. “I feel that people are going to end up paying [the tax] that shouldn’t because they either miss it or don’t understand the process. They shouldn’t be downloading all of this onto the good citizens of Nanaimo and the other communities where they have this tax.”
New Democrat Sheila Malcolmson said she’s been out door-knocking and has heard that people are encouraged that the government is introducing another tool to address the housing crisis and issues of affordability.
“If this is able to identify who is taking advantage of the market, those who are speculators, if we can generate results from this, it will be one more way to address the terrible vacancy rates and the terrible increase in the cost of housing in the region,” said Malcolmson, who stepped down as MP for the Nanaimo-Ladysmith riding to run provincially.
The Green Party’s Michele Ney, a retired teacher, Conservative Justin Greenwood, Robin Richardson of the Vancouver Island Party and Bill Walker of the B.C. Libertarian Party are also running to fill the seat, which was left vacant when longtime NDP MLA Leonard Krog resigned in November after he was elected Nanaimo mayor.
The byelection could shift the balance of power in B.C., as the NDP’s minority government is propped up by an alliance with the Green Party. Together, the NDP and Greens have 44 seats. The Liberals have 42.
James said she’s not worried that the timing of the announcement could hurt the NDP’s chances of success in the byelection.
“I’m not at all [worried]. In fact I was in Nanaimo last weekend, spending time knocking on doors, talking to people with Sheila Malcolmson and the issues that I heard from people were the issues of affordability,” James said. “It’s no surprise to me that you’d see the other side play a bit of politics during this time, but I think people recognize and understand the need to address this crisis.”
Malcolmson said she has no issue with the announcement coming out two weeks before the byelection. “I can appreciate the fact that Nanaimo is having a byelection isn’t holding the government back from doing the work that’s needed across the province.”
The speculation tax legislation requires the finance minister to meet annually with mayors to hear their concerns about the tax.
Not a speculator? Click here – Times Colonist
Homeowners better pay attention when tax declaration notices arrives, because ignoring it means they’re automatically assumed to be speculators and will be penalized several thousand dollars a year.
"Homeowners will file an annual tax declaration which will help tax administrators demonstrate whether owners need to pay the tax,” Finance Minister Carole James told the legislature last fall.
It was one of many details being scrutinized at the time, and the full import of what she said wasn’t explored.
It landed a lot harder this week, when the Finance Ministry outlined what that entails. Collecting the tax means a lot of administrative work for government and an annual chore for tens of thousands of homeowners.
The NDP government’s plan is to tax owners of vacant homes in the five most populated regions of B.C.
But there’s no easy way to figure out whose homes are vacant. So the tax collector is starting from the assumption that the speculation tax applies to every single property owner in those regions.
Homeowners will have to fill out a new declaration form that their homes are occupied in some fashion in order to win an exemption.
Every homeowner in most of the capital, Metro Vancouver and Fraser Valley regions, along with Kelowna and Nanaimo, will be getting notices soon. And they’d better pay attention when it arrives, because ignoring it means they’re automatically assumed to be speculators and they’ll be penalized several thousand dollars a year.
The current rate is a half-per cent of assessed value — $5,000 on a million-dollar property.
“If you don’t complete your declaration, you’ll receive a tax notice charging you the tax at the maximum tax rate,” the ministry warns.
As well, co-owning spouses each have to fill out the form annually.
The ministry is mailing out 1.6 million notices to homeowners in speculation-tax areas starting this week. The working estimate is that a small fraction (about two per cent) of homeowners will have to pay the new tax.
But the declaration is an important new wrinkle in the paperwork associated with owning a home.
The ministry arranged a demonstration Wednesday of how to fill it out online. In the simplest possible scenario — Canadian citizen, B.C. resident, owner-occupier who pays taxes in B.C. — it took three minutes.
Commercial building assessments process lacks teeth: critics – Times Colonist
Veteran assessor says authority has been flying blind with little information, leading to catch-up assessments with huge value jumps.
B.C. Assessment is doing its job with one hand tied behind its back when it comes to larger industrial, commercial and investment property valuations, according to a recently retired assessor.
Derek Holloway said with no teeth in the legislation governing the assessment process, the authority is flying a little blind when it comes to assessing those properties, leading to catch-up years when commercial property values rise significantly and, in some instances, tax shifts to other classes of property.
Holloway, a 28-year B.C. Assessment veteran, said there is nothing in the Assessment Act that compels companies to provide B.C. Assessment with information such as income, vacancy rates, expenses and capitalization rates (the return a property is expected to generate before owners service any debt).
B.C. Assessment staff have told local commercial real estate agents they expect a 60 to 70 per cent rate of compliance from commercial firms when they ask for information. “Sometimes they get the information, sometimes they don’t,” Holloway said. He added when you take that into account, along with the fact there are significantly fewer commercial sales each year to establish market value, it becomes difficult to put an accurate value on commercial property.
“If the system worked properly and the big guys paid their fair share and B.C. Assessment got it right every year there wouldn’t be this annual year-to-year value consternation,” he said.
This year, B.C. Assessment says commercial and industrial properties in Greater Vancouver have risen up to 55 per cent year over year, while those in Victoria have seen up to a 25 per cent increase in assessed value.
Holloway said when assessors have limited information to go on, commercial properties can go under-assessed for years. “And what they should have paid [in property taxes] gets shifted to all other taxpayers,” he said. “If B.C. Assessment can’t get access to the information they need to do the job right for everybody, then taxes do shift to other classes, from big players to mom-and-pop commercial properties to residential.”
Tina Ireland, assessor for Vancouver Island, agreed the determination of market value for commercial property can be difficult, but she said they have several sources of information they can access.
She said they analyze sales, interview sellers and buyers, review market studies and ask for income and expense reports.
“We try to get as much information as we can,” she said. “We get a fairly decent return rate on our requests, though some may be less forthcoming than others.
“Under the Act, we are entitled to the information, so we do ask for it and we do follow up.”
The problem is there is no penalty for those who don’t comply.
Holloway is advocating for more teeth in the Assessment Act, making it compulsory for companies to submit income reports, appraisals and the like. He suggests if those companies do not comply, they should not, for example, be able to avail themselves of the appeal process.
