After the reviewing the Speculation and Vacancy Tax Act, SBC 2018, c 46 (the “Act”) and chatting with Service B.C. representatives, we can advise that the speculation and vacancy tax is an individual tax not a property tax.
So, what does that mean? It means that that the tax is similar to income tax. It is NOT like a municipal property tax which attaches to the property and is payable by whomever owns the property (regardless of whether they owned the property at the applicable time or not). It means that should a property owner not pay their speculation tax in July, the B.C. government will take enforcement measures against the individual person much like Canada Revenue Agency would for unpaid income taxes. The unpaid tax will NOT attach to the property tax roll.
This also means that the liabilities for the tax are set forth in the above noted Act, and for any upcoming property sales it does not need to be addressed as between the Buyer and the Seller in the Contract for Purchase and Sale. This is because the new buyer will NOT become liable for a previous owner’s unpaid speculation tax, if any. However as real estate a professionals, we can add value to our clients by educating them that they still need to make the declaration each year regardless of whether they have sold the property before the tax is paid. By way of example, if Person A owns a property on December 31, 2018 they need to fill out a declaration by March 31, 2019. If any speculation tax is owing this must be paid by Person A by the beginning of July 2019. This does not change even if they sold the property effective January 1, 2019. As such, we recommend including an acknowledgment in the contract to remind the Seller of their ongoing personal obligation to file the declaration and pay if they are not otherwise exempt.
“Speculation and Vacancy Tax: The Seller is aware that a speculation and vacancy tax on the assessed value of the property may still be owing and payable by the Seller with respect to their use and ownership of the Property for the last calendar year, notwithstanding the sale of this Property. The Seller has been advised to seek professional accounting advice regarding any questions about speculation and vacancy tax declarations, liability and exemptions.”
There are several implications of the Act that property owners should be aware of – stay tuned to our blog site for a further more comprehensive article on the implications of the speculation and vacancy tax.
As always, we strongly recommend seeking advice from the chosen professionals with respect to closing on a particular transaction as this will assist in making the new home buying or selling experience as smooth and stress-free as it can be.
Author: Jennette Vopicka
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of real estate law at the following:Jennette Vopicka: firstname.lastname@example.org Danielle (Dani) Brito: email@example.com Jane Otterstrom: firstname.lastname@example.org Una Gabie: email@example.com