Is B.C.’s Speculation Tax a Good Thing?

In the last year, many new rules that govern the sale and ownership of real estate in British Columbia have been implemented. These new regulations are meant to address B.C’s housing crisis. The high cost of real estate, low rental vacancy rates, rental restrictions, and the flood of foreign investment have made it difficult for many British Columbians to find housing in their home province.

In the last few years, property values in B.C have skyrocketed. The Speculation Tax, first announced in the province’s February budget, was meant to cool down a hot market. It taxed vacant properties an additional 0.5 per cent in 2018. In 2019 it will rise to an additional one per cent for out-of-province Canadians and two per cent for foreign investors.

So far, the tax has had the desired effect. Sales are down across the province. The Victoria Real Estate Board is reporting a 29.8 per cent decrease in sales in June compared to the same month in 2017. Correspondingly, the total number of listed homes in Victoria in June 2018 was up 35.5 per cent over June of last year.

The tax was meant to help British Columbians. However, because many B.C. residents own a second homes in recreational markets, it has met strong resistance.

Is the Speculation Tax a good thing? It all depends who’s asking. While potentially making more properties available for purchase, is may be weakening markets across the province, driving potential purchasers to invest elsewhere. If you own a home—or, especially, multiple homes— you may feel the tax is destructive and unfair.

Realtors province-wide are also feeling the effects of new rules, including those regarding dual agency. Combined with the Speculation Tax and new mortgage regulations, these rules are also putting a damper on the market.

Even though the market is evolving, property sales are continuing at a healthy pace—especially in places like Greater Victoria, where people are drawn to the area’s charming character, history, and beautiful setting. In the long run, real estate has generally proven to be a good investment—even if, in the short term, the trajectory isn’t always straight up.