BC is in progress of proposing a special “empty housing” tax and many people have weighed in on what they think would be fair. This new tax rule will definitely impact our income in one way or another. Lets go over two approaches that people have voiced from around the web.
The first popular approach would be to levy an additional tax on non-resident owners and ditch the “empty housing” tax altogether. West Vancouver Mayor Michael Smith gave a great example and explained that in Hawaii, he pays a non-resident tax rate because he owns a house there. This approach is more logical because everyone has a different definition of vacancy. Although, on paper this approach seems fair, this approach won’t quite work because Canada and the US have different exemption for capital gains. This means, the approach would still benefit resident homeowners because they can literally flip houses and reap in the awards of their investment properties.
The other approach that was published in the Globe and Mail would be to introduce a surcharge on property tax but owners could credit their income taxes against this surcharge. Only those who don’t already pay income taxes in Canada, which are those who leave properties vacant or don’t declare their income, would end up paying the surcharge. Some have doubts with this approach because it ultimately puts more money in local workers and put upward pressure on the housing prices.
Let us know how the new vacancy tax rule should be enforced!