Sidney implores B.C. to rethink real estate speculation tax
The Town of Sidney is calling on B.C. to take a second look at its contentious speculation tax, warning that many longtime homeowners who contribute to the community are already planning to sell their properties.
“We have some serious concerns about the impact of this tax on our community and its residents who own vacation property or second homes in Sidney,” Mayor Steve Price said in a letter to Premier John Horgan.
Council voted unanimously Monday to implore the province to rethink the tax.
Sidney is urging the province to hold off on introducing the speculation tax and asks the province to re-evaluate its approach to housing affordability.
The town is asking to be exempt from the tax, if it is approved. If Sidney is not exempted, the town is requesting that existing owners be “grandfathered” so they won’t be hit with additional charges.
“In addition, consideration should also be given to appropriately phasing in such a tax over a much longer period of time to avoid panic sales and a significant loss of equity to existing homeowners,” Price said.
Homeowners subject to the tax will face “significant increases in their annual tax bill, so much so, that most would be required to sell,” Price said.
“The vast majority of residents that we have heard from would most certainly not be considered ‘speculators.’ ”
B.C. unveiled plans for its speculation tax in its February budget and this week announced changes and new details.
“To help make housing in overheated markets more affordable and available, the B.C. government is targeting property speculators, while making sure that over 99 per cent of British Columbians will not pay the speculation tax,” a government statement said.
It largely exempts British Columbians who own vacation properties.
The tax is aimed at those who leave properties empty. Homeowners can avoid the speculation tax by renting their property for at least six months in a year.
Parksville and Qualicum Beach had initially been included in the areas covered by the tax but were subsequently dropped.
Communities included are the capital region, except Salt Spring Island and the Juan de Fuca electoral area, Nanaimo-Lantzville, Metro Vancouver, Kelowna, West Kelowna, Abbotsford, Chilliwack and Mission.
The rate will be 0.5 per cent of property value annually for British Columbians, one per cent for other Canadians, and two per cent for foreign investors.
British Columbians with vacant second homes will be eligible for a tax credit of $2,000 applied against the speculation tax. The tax credit ensures that British Columbians do not pay taxes on a second home valued up to $400,000, the province said.
Sidney’s population of 11,670 lives in an area of five square kilometres on the Saanich Peninsula. Its picturesque downtown and waterfront make it a tourist destination.
It attracts retirees. Statistics Canada says 40 per cent of Sidney’s population is 65 years or older, based on the 2016 census.
Sidney council does not want to lose these people who are facing a tax hit, Price said. “They contribute to the local economy, support local business, have friendships and social circles, volunteer their time and skills, and donate to various local causes.”
Worried homeowners are calling city hall, sending emails, and stopping him on the street, Price said. One high-end condominium building will likely see nine units go on sale because of this tax, he said.
He spoke with a “distraught” couple from Alberta who have a waterfront home they’ve owned for about a decade, along with a boat at a nearby marina. The couple and their family members visit Sidney regularly.
The couple is now talking about selling. “They are beside themselves.”
Price said it is unlikely that homeowners would want to go to the trouble of repeatedly packing up personal belongings to make room for renters, rent out their home while they are away, and unpack when they return.
Also, these are high-end properties that would command rents of a few thousand dollars a month — far above what the typical renter is seeking, Price said.
Reposted from TIME COLONIST