B.C.’s new speculation tax will impact several real estate markets in the province, including Victoria, Kelowna and Metro Vancouver.
June 27, 2018 | Barb Livingstone
Up in the air
New B.C. speculation tax could prompt Albertan vacationers to look closer to home for second-property purchases
Scott Henderson has split his work time between clients in the Okanagan and those in his hometown of Calgary for the last 15 years.
Eight months ago, the marketing/communications agency owner got pre-qualified for a mortgage for a second residence in Kelowna. Then, this February, B.C.'s provincial government announced a speculation tax on out-of-province and foreign owners to discourage buy-up of housing by investors who, it claims, leave homes empty and drive up home prices. A homeowner can avoid the tax by living in, or renting out, the home half the year.
Henderson planned on using the Kelowna home one week per month, but everything is on hold until he sees whether the tax – which would increase his monthly costs by about 50 per cent – becomes law
"I am not a speculator," he said. "I want to live and work in both places, so why is this not possible?"
"The charm of our town will outlive our government." - Justin O'Connor, Canadian Home Builders Association-Central Okanagan president
The annual tax, as of 2019, will be one per cent for non-B.C. owners and two per cent for non-Canadian owners of real estate in Kelowna and West Kelowna, Nanaimo-Lantzville, Metro Vancouver, Capital (Victoria) Regional District (excluding Gulf Islands and Strait of Juan de Fuca), Abbotsford, Chilliwack and Mission. B.C. residents with secondary residences will pay 0.5 per cent, but are eligible for a tax credit.
Calgary's Marsha Graham, a real estate professional with Urbanmove Realty, has owned a home in Victoria (where she is also licensed to sell real estate) for 14 years as part of her longer-term retirement plans.
She says the proposed tax does not address the stated problem of speculation driving up housing costs. The B.C. government is using the new tax to address what is primarily a Vancouver high-rise speculation issue, but imposing it on people using secondary residences for vacations and eventual retirement.
For now, Graham is taking a wait-and-see attitude until the fall with her Victoria property, while expecting some Alberta clients may shift recreational buying to areas like Canmore and Sylvan Lake.
Justin O'Connor, Canadian Home Builders Association-Central Okanagan president and senior vice-president of sales for Sotheby's International Realty in Kelowna, says the proposed tax is a pure wealth tax.
His organization and 20 others have launched www.scrapthespeculationtax.ca to stop its implementation.
He says large numbers of Albertans have owned in Kelowna for decades, and "that's not speculation."
Already, new housing projects have been scrapped or put on hold because of the uncertainty, "killing supply and driving up prices."
"How does that help affordability?" he said.
However, O'Connor says Kelowna has so much going for it that the area will continue to attract Albertans.
"The charm of our town will outlive our government," he said.
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