The British Columbia (B.C.) Speculation and Vacancy Tax (SVT) is a provincial initiative aimed at addressing housing affordability by discouraging property speculation and ensuring that residential properties are utilized effectively.
Introduced in 2018 through Bill 45, the SVT targets homeowners who leave residential properties vacant in specific urban areas of B.C. The primary goal is to increase the availability of housing by incentivizing owners to sell or rent out their properties or face additional taxation.
Areas of Application
The speculation and vacancy tax was initially expanded to six new communities in 2022 for the 2023 tax year, including:
- Metro Vancouver
- Capital Regional District (including Victoria)
- Fraser Valley
- Kelowna and West Kelowna
- Nanaimo
- Lantzville
New communities added effective January 1, 2025:
- Vernon, Coldstream
- Penticton, Summerland
- Lake Country, Peachland
- Courtenay, Comox, Cumberland
- Parksville, Qualicum Beach
- Salmon Arm, and
- Kamloops.
These areas were selected due to their significant housing affordability challenges and high demand for rental properties.
Tax Rates and Exemptions
The SVT rates are determined based on the owner’s residency status:
- Canadian citizens or permanent residents: 0.5% of the property’s assessed value.
- Foreign owners and satellite families: 2% of the property’s assessed value.
Several exemptions exist, including:
- Principal residence-related exemptions
- Previous principal residence
- Occupied by a tenant
- Newly constructed homes
- Properties under renovation or uninhabitable due to disasters.
- Cannot live in the residence because it’s uninhabitable
- Secondary residence close to medical treatment facility
- Just bought or inherited the property
- Separation or divorce
- Bankruptcy
- Recent death of owner
- Property is in a trust created for a minor by a will
- Property is in a trust for the benefit of a charity
- Property is a strata hotel
- Property includes a licensed child daycare
- Property is only accessible by water
- Other exclusions from the tax
Property owners are required to declare their property’s status annually to determine SVT applicability.
Impact and Revenue
Since its implementation, the SVT has generated substantial revenue, which the provincial government allocates to affordable housing initiatives. For instance, in its initial years, the tax collected millions of dollars, contributing to the development of new housing projects and support programs.
Moreover, the SVT has been associated with an increase in available rental units, as property owners opt to rent out previously vacant homes to avoid the tax.
Vancouver’s Empty Homes Tax
Separately, the City of Vancouver introduced its own Empty Homes Tax (EHT) in 2017, aiming to address the city’s specific housing challenges. The EHT started at 1% of the property’s assessed value and has since increased to 3%. This municipal tax operates alongside the provincial SVT, meaning some properties in Vancouver may be subject to both taxes if they meet the criteria.
Criticisms and Considerations
While the SVT aims to improve housing availability, it has faced criticisms:
- Administrative Burden: Property owners must annually declare their property’s status, which some find cumbersome.
- Fairness Concerns: Some argue that the tax may unfairly impact individuals who own secondary properties for legitimate reasons, such as work or family obligations.
- Effectiveness: Debates continue over the tax’s long-term effectiveness in significantly improving housing affordability.
The Speculation and Vacancy Tax represents B.C.’s proactive approach to tackling housing affordability by encouraging the effective use of residential properties. While it has shown positive impacts in increasing rental availability and generating revenue for housing projects, ongoing assessments are essential to ensure its fairness and effectiveness in the evolving real estate landscape.
For more detailed information or to declare your property status, visit the B.C. Government’s official website.
*Budget 2025 proposes that, for 2026 and subsequent years, the tax rate is:
- 3% for foreign owners and untaxed worldwide earners
- 1% for Canadian citizens or permanent residents of Canada who are not untaxed worldwide earners
* Untaxed worldwide earner
An untaxed worldwide earner is an individual whose unreported income in Canada is greater than their reported total income in Canada. An individual’s income is combined with their spouse’s income for the purposes of this calculation.
The reported and unreported income used are from the year before the speculation and vacancy tax year.
