foreign buyers

Vacant dwellings yield revenue gains for B.C.

Fewer property owners collectively paid higher premiums in levy's second year
Wednesday, January 13, 2021

Nearly 7,600 British Columbia property owners were tapped to pay a tax surcharge on vacant dwellings in 2019, garnering more than $88 million that the provincial government has pledged to invest in affordable housing. Recently released data for the second year of speculation and vacancy tax (SVT) collection shows a 32 per cent drop in mandated SVT ratepayers since the inaugural 2018 levy, but a 29 per cent gain in revenue with the implementation of a higher tax rate, of 2 per cent, on foreign property owners and so-called satellite families that earn the greatest share of their annual income outside Canada.

More than 1.4 million property holders in five designated regions — Metro Vancouver, Victoria, Central Okanagan, Fraser Valley and Nanaimo — submitted required information about the occupancy status of their residential properties. Just 0.1 per cent of those declarants were levied the SVT surcharge on vacant properties that did not meet any of the more than ten criteria for exemption.

“The 2019 declaration data and reports from organizations like the Canada Mortgage and Housing Corporation show an increasing number of properties are being repurposed as long-term rentals. This change in behaviour, and the tax continuing to capture speculators while exempting almost all British Columbians, shows this tax is working for the people of our province,” submits Selina Robinson, B.C. Minister of Finance.

Nearly 360,000 property owners reported tenants in their residential dwellings — an increase of more than 5,000 from 2018. Another 3,496 vacant dwellings were new inventory about to come onto the market for the first time — an increase from the 2,993 properties receiving SVT exemptions for that reason in 2018.

Together, foreign owners and satellite families paid nearly $61 million in SVT, contributing almost 69 per cent of collected revenue. They were most likely to be levied on condominiums located in Metro Vancouver and pay a SVT surcharge upwards of six times greater than resident British Columbians who were charged SVT at a rate of 0.5 per cent of the assessed value of their vacant residential properties.

Resident British Columbians own the largest share of vacant dwellings subject to the SVT surcharge, at 30 per cent, but account for just 6.6 per cent of collected revenue. Corporations, trusts and partnerships — lumped into the “other” category of ownership — own 1.9 per cent of vacant dwellings, but paid 5 per cent of collected SVT. Nearly 14 per cent of those liable, collectively paying $12.3 million, are categorized as undeclared owners.

About 3,600 fewer property owners paid the SVT surcharge in 2019 than in the previous year, with the most significant decrease was seen among foreign owners and satellite families. Notably, 1,413 foreign owners sold their vacant properties, while 1,205 installed tenants.

In 2019, satellite families paid an average of $16,879 per 1,579 properties; foreign owners paid an average of $16,192 per 2,104 properties; and resident British Columbians paid an average of $2,515 per 2,287 vacant dwellings. The “other” category of ownership paid the highest average SVT at $30,859 per 142 properties.

Like resident British Columbians, resident Canadians based in other provinces/territories were taxed at a rate of 0.5 per cent of assessed value. That averaged $3,442 per 1,483 properties, resulting in $5.8 million of SVT.

SVT was levied on 3,145 condominium units, 1,863 detached homes, 726 townhouses and 118 other dwelling types, including duplexes and semi-detached homes. Resident British Columbians typically hold lower-valued properties, pegged at an average of $983,000, while satellite families and foreign owners paid SVT on vacant dwellings with an average value in the $1.18- to $1.2-million range.

Vacant dwellings in Metro Vancouver generated $63 million or more than 71 per cent of SVT revenue, with foreign owners and satellite families in the five municipalities of Vancouver, Richmond, West Vancouver, Burnaby and Surrey paying $44.5 million or more than half of all SVT collected in 2019. In contrast, Nanaimo accounted for just $802,426 or 0.9 per cent of SVT levied.

Meanwhile, Kelowna and West Kelowna stand out for the number of resident Canadians from outside B.C. absorbing the SVT surcharge. They outnumbered foreign owners’ and satellite families’ share of vacant residential properties by more than four to one in the Central Okanagan region. Canadian citizens and permanent residents from other provinces paid $1.3 million of the roughly $2.7 million of SVT collected Kelowna and $741,000 of $1.4 million of SVT collected in West Kelowna.

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