BC Speculation and Vacancy Tax: Am I Exempt?

The BC government first introduced the BC Speculation and Vacancy tax in 2018 to incentivize homeowners to occupy their vacant properties. The tax also aims to generate revenue for housing initiatives, ultimately creating a more affordable housing market. Recently, the province has introduced legislation to expand the tax to more communities in BC. Most BC residents are subject to an exemption from the tax. In this article, we’ll discuss the various exemptions available for homeowners and how the declaration process works.

What is the Tax?

The Speculation and Vacancy Tax aims to reduce the number of residential properties that sit vacant. In British Columbia, institutional and foreign investors in real estate have gained a reputation for leaving properties empty. Until recently, the Speculation tax only applied to residential properties in the following areas:

• Capital Regional District (CRD)
• Metro Vancouver Regional District
• City of Abbotsford
• District of Mission
• City of Chilliwack
• City of Kelowna
• City of West Kelowna
• City of Nanaimo
• District of Lantzville

As of 2024, property owners in the following areas also have reporting obligations:

• Vernon, Coldstream;
• Penticton, Summerland;
• Lake Country, Peachland;
• Courtenay, Comox, Cumberland;
• Parksville, Qualicum Beach;
• Salmon Arm; and
• Kamloops

Responsibilities of Homeowners

If you own property in any of the areas listed above, you must submit a yearly declaration form. The form tells the government about where you live and how you use your property or properties. The BC government sends a letter to those subject to the tax to ensure people are aware of their responsibilities. Homeowners in applicable areas must fill out the declaration each year, even if they are exempt from the tax.

The Yearly Declaration Form

Residential property owners in the newly affected areas will have submitted their first annual declaration form in January 2025. The form will report on the property’s use in 2024. When you receive your declaration letter, it will include a letter ID and a declaration code. You can use this information to quickly submit a declaration online. You can also submit your declaration over the phone.

Exceptions to the Speculation and Vacancy Tax

Most BC residents are exempt from the tax, which aims to deter a specific type of property investment which reduces available housing stock. In this section, we’ll discuss the details of the available exemptions to individuals.

Entities Which Are Always Exempt

Properties owned by the following groups and organizations aren’t subject to the tax and do not need to submit an annual declaration form:

• An Indigenous Nation or a corporation owned by an Indigenous Nation
• Registered charities
• Housing co-ops
• Certain not-for-profit organizations
• Municipalities, regional districts, governments and other public bodies
• Corporation owned by municipalities or regional districts
• Corporations incorporated or continued through an enactment (“crown corporations”)
• Corporations designated as “agents of government” by legislation, and their wholly owned subsidiaries

Further, properties with an assessed value under $150,000, or unstratified apartment buildings with four or more units are excluded from the tax.

Exemptions for Individuals

On the annual declaration form, you must claim the exemptions relevant to you only. Different exemptions can apply to different owners, even of the same property. The Provincial government has provided the following example of how individuals with shared ownership should report their exemptions:

“If a parent co-owns a home with their adult child and the adult child lives in the home and the parent lives elsewhere, then the following exemptions may apply:

• The child claims the principal residence exemption
• The parents claim the tenancy exemption for family or other non-arm’s length persons”

Principal Residence Exemptions

In a nutshell, the principal resident exemption means that your home won’t be subject to the tax. However, there are a number of reasons that individuals may not live in their principal residence for extended periods of time throughout the year. There are detailed exemptions which homeowners can claim, depending on the circumstances. Owners of a property can be exempt, even if they are not living in the property full time, if:

• A person with a disability designated under the Canada Pension Plan, Employment and Assistance for Persons with Disabilities Act, or the federal Disability Tax Credit under the Income Tax Act lives in the property as their principal residence. 
• An owner or owners are temporarily living away from the residence for medical or work reasons. 
• The owner is a member of the Canadian Armed Forces and is living away from the residence due to military service requirements. 
• An owner is living in a residential care facility and their spouse still resides on the property.

Previous Principal Residence Exemptions

If you have moved out of a property that was your principal residence, you may still be able to claim the exemption if:

• You lived in the residence before moving out of province, and were unable to tenant or sell the home before the end of the year. 
• You lived in the residence before moving into a residential care facility. This exemption can apply for up to two years. 
• You are living away from the home for medical reasons, for up to two years. 
• You moved out of the property because it became uninhabitable as a result of a disaster or hazard. 
• You have temporarily moved to a secondary residence to be closer to medical treatment. 
• You and your spouse have separated or divorced in the same calendar year, and one spouse has moved out of the residence.

Tax Exemptions and Estate Planning

There are also a number of exemptions relating to the death of a homeowner and the estate’s tax liabilities if the house is held on trust after their passing. If a homeowner dies, their estate and any other living owners on title are exempt from the vacancy tax for that year, and the year immediately following. This eases the burden on estate administrators who may be stuck waiting for probate to be able to distribute the property to its beneficiary. 

Further, if the property is held in a trust created in the owner’s will for the benefit of a minor, the property is exempt until the beneficiary turns 19. This means that a property can be vacant without being subject to the tax, so long as all beneficial owners of the property are minors. If the beneficiary of the trust is a charity, the property held on trust will also be exempt.

Reminders for Homeowners

It can be challenging to navigate exemptions for this tax, particularly if you are living in an area that is only subject to the tax for the first time this year. If you’re unsure of how the tax will impact you, your investments or estate plan, contact an experienced lawyer today.

For more information, you can find the full list of exemptions for individuals here.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.