NDP Property Tax Increases In 2019
The NDP are proposing to change or legislate the following taxes on developers and land owners
- Property Transfer Tax
- School Tax
- Speculation Tax
For Vancouver, there is also the Empty Homes Tax.
This is payable upon REGISTRATION on the market value at the date of registration, not the date of agreement. BC Ministry of Finance (BC Min) generally use the assessed value, but this can be challenged.
School Tax Surcharge for Residential
In addition to the regular school tax, for each $1M (the current school tax is approximately $1,000), a further tax is levied on most residential properties. For a $5,000,000 property, surcharges are as follows:
Therefore, the total tax in the above example would be $6,000 + $1,000 x 5 = $11,000. For each additional $1,000,000 over $4,000,000, the charge is $4,000 plus the regular amount due ($1,000).
The speculation tax is a tax on empty residential properties in certain metropolitan areas. These are:
- Metro Vancouver (excluding Bowen Island and Electoral Area A, except the part of the
- Electoral area that is the UBC and University Endowment Lands)
- Capital Region District (excluding the Gulf Islands and Juan de Fuca)
- Kelowna-West Kelowna
- Nanaimo-Lantzville (excluding Protection Island)
- It applies to all residential properties, which I will assume is the same as BC Assessment class (01), that are not rented. It would therefore apply to:
- Vacant lots
- Multifamily apartments
- Part of a mixed-use building or parcel with mixed classification
The rates vary. For each $1M of value:
It is actual use not proposed use that counts in the assessment process. It is unknown if the same rule applies but we will assume it does and Oct 31st is the relevant date.
Vancouver Empty Homes Tax
Only the City of Vancouver imposed a tax on any residentially classified property (01) not occupied or rented for 30-day periods for any six months in a year. The fee is 10.00 extra points on the mill rate, which is close to the (06) rate or $10,000 per $ million of value.
Exclusions can be found on the City web site https://vancouver.ca/your-government/vacancy-tax-bylaw.aspx
For a $5M parcel in 2019, taking a generic current mill rate of 2.5 before extra taxes, the annual property taxes will be:
Each municipality will have a different base mill rate.
Uncertainties of New Housing Taxes
- The taxes relate to individuals; no documentation states that companies are included. Assume they are for now.
- Rented for any period of 30 days for 6 months in any year. Is this a calendar year and is it the year prior to the tax being paid (2018) or the year of the tax (2019). It appears to be in each year with 3 month rental applicable in 2018.
- Will this be the vendor or the purchasers responsibility? It should be covered when closing.
- What is a residential property? One might assume that it is the same as BC Assessment class (01).
- How will the residential vacant air space be treated and how are the taxes mitigated.
- Is it October 31st when the use of the property is determined.
Peter Austin would be happy to meet with anyone who would like further elaboration or wish to learn how to mitigate the effects of the taxes.