Are you a resident with property in British Columbia, who might also travel often to other locations for work, or who enjoys living abroad for multiple months in a year? Then the Empty Homes Tax may impact you. Also known as the Vacancy Tax, this property tax carries specific rules and responsibilities that real estate lawyer, Arsen Krekovic at Vancouver’s Hoogbruin & Company, has some comment to advise you.
The Empty Homes Tax declaration deadline comes up the first Thursday of February and applies to the previous year. A property owner must confirm whether their home was occupied or not, for at least six months of the year. Municipal offices will use the terms Empty Homes Tax and Vacant Homes Tax interchangeably. The declaration is distinct from the Speculation Tax which is the term used for property located in provincial jurisdictions.
Many homeowners who travel a great deal or who live elsewhere hire an experienced real estate lawyer. Navigating the declaration is one aspect, but a lawyer can help identify whether the property meets criteria for exemptions to the Vacancy Tax that will be applied in the case of late declarations or requests for review. Why pay more tax when you can be informed and confident in your residential property’s status and your responsibilities?
In addition, you must declare separately for each tax and you may be exempt from one tax but have to pay the other. In today’s post we begin with a look at the Empty Homes Tax.
Real estate litigator Arsen Krekovic on BC’s Empty Homes Tax
Background: The BC housing market has enjoyed great growth as new homebuyers step up from one level of ownership to another. Or, those new arrivals who wish to buy residential real estate property to set down their roots here.
Buyers, though attracted from near and far to what the region has to offer, may intend to only spend limited time within BC. They may have homes elsewhere, or they may be foreign investors who have bought up inordinate amounts of real estate properties in the province’s market.
Both the BC Speculation and Vacancy tax, instituted in 2017 were put in place to alleviate some of the strain on the housing market by foreign buyers. A small tax was levied on property owners that do not reside in their home for more than 180 days or six months of the year.
The purpose of the tax and focus on the occupancy of homes, was to encourage turning empty homes into actual housing for British Columbians. The tax imposed on foreign owners with foreign income was meant to contribute fairly to BC’s tax system.
What is legally considered an ‘empty home’ or vacant property?
The legal definition of an empty home or vacant property is fairly straightforward:
A property is considered to be vacant if it has been unoccupied for more than six months of a year. That 12 month period is deemed to be the tax year of January 1 to December 1.
Failure to make a property status declaration will result in a property being deemed vacant and therefore subject to the Empty Homes Tax.
The Empty Homes Tax will apply to individuals based on:
- How their residential property is used
- A property owner’s residence status
- The actual location where a property owner earns and reports their income.
Empty Homes Tax requires a Declaration:
- A declaration must be submitted annually
- One is required each year as personal circumstance may have changed. It may even be due to a fire rendering a home uninhabitable, or due to restrictions on travel that occurred, for example, during COVID-19 when people were unable to return home.
- If a property has more than one owner, each owner must submit a declaration. This requirement stands regardless of familial relationships or marital status.
More reasons why you need to declare in relation to Empty Home Tax:
- The tax is based on how each individual owner uses the property. Again, their having foreign income is also a factor.
- BC does require a declaration of your residency status whether you pay taxes in Canada or not. This information plus how you use your property is used to determine which tax rate you or your co-owners must pay, if it is applicable, or if you qualify for a tax exemption.
In 2023 the Empty Homes Tax is due by April 14! To read more about the basic information see the BC government site’s FAQ here Contact real estate lawyer, Arsen Krekovic for help navigating the declaration process of filing an appeal.
Can You Appeal the Tax?
As you essentially cannot opt-out of the tax, even if you are in disagreement with the need to declare or because you forgot to file your declaration, you still can file a formal appeal if you believe there has been an error made in your assessment.
A note to be aware of: Even if you plan to appeal, the province strongly advises that you pay your assessment to avoid further complications. In the case your appeal is approved, you will be paid back any overages, as well as interest.
Connect with Arsen Krekovic and Hoogbruin & Co if we can be of help in fully understanding and meeting your responsibilities in relation to the Empty Homes Tax in BC.