Deal With Strata Properties? Learn More About the Expiring Speculation and Vacancy Tax Exemption for Strata Owners
TAGS: Practice Tips Real Estate Practice Spec Tax Speculation and Vacancy Tax Strata Strata Properties SVT
If you're a REALTOR® who has clients involved in strata property transactions, you may get asked questions about owners renting out their units and the implications on the Speculation and Vacancy Tax (SVT). Until now, strata owners who were not permitted to rent out units may have qualified for an SVT exemption. That changes in 2022.
Strata owners should be aware that they may be required to pay the SVT in 2022 if their property is unoccupied.
Prior to the 2022 tax year, if a strata owner had a covenant or a bylaw preventing property from being rented out, then they would qualify for an SVT exemption. This only applied if the rental restriction was in place on or before October 16, 2018 and the owner also purchased the property before that date. For example, if a BC resident purchased a strata property prior to 2018 but under their strata bylaw they are not allowed to rent it out, they will have qualified for the SVT exemption between 2018 and 2021, but they will have to pay the tax for 2022 if the unit remains unoccupied.
The SVT is an annual tax based on how owners use residential properties in major urban areas of BC. The annual tax rate is two per cent of the assessed property value for properties owned by foreign owners and satellite families, and 0.5 per cent for Canadian citizens or permanent residents. The minimum residency requirements to avoid the SVT are that the unit be occupied for six months (180 days) out of every year.
Last month, the BC Government released data on the SVT. BC residents who are captured by the tax rose by 51 per cent in the last year, while the number of non-BC residents captured by the tax fell by 24 per cent.
The objective for the SVT was to discourage housing speculation and encourage people with vacant homes in BC to convert them to long term rentals. To learn more about the economic impacts of the Speculation and Vacancy Tax, read BCREA's Market Intelligence report.
Learn more about other SVT exemptions here.
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