Both the BC provincial government and the City of Vancouver levy so-called vacancy / speculation taxes. However, the implications for home purchasers differ. Below is an excerpt from a recent article written by Kim Spencer, Manager of Professional Standards at the Real Estate Board of Greater Vancouver.
"Since 2018, both our provincial government and the City of Vancouver have decided to harness their taxation power by creating new taxes to drive property owner behaviour in the direction they want: to discourage a property from being left vacant when it could be rented, and to discourage speculation in real estate.
I’m not wading into a discussion on whether these taxes are a good idea from a policy perspective. But given that the province’s speculation and vacancy tax and the City of Vancouver’s empty homes tax are a fact, we should consider how they affect buyers and sellers. Property owners in the City of Vancouver with vacant homes are liable to pay both taxes.
Both taxes are triggered by a home’s occupancy during the taxation year. The City of Vancouver doesn’t have the power to levy taxes directly on property owners; it can only tax property. This matters because the tax, if applicable, attaches to the property. If ownership changes and the tax has been levied (but not paid) by the previous owner, there can be a dispute about who has to pay it when it becomes due.
As far as the city is concerned, the property owner of record is responsible for paying the tax. But if the owner of record has changed since the tax was triggered, what then?"
And just for further complication, the City of Vancouver can open investigations as much as two years after a declaration. As a matter of course I include clauses in my Offer to Purchase contracts to protect my buyer clients from inadvertantly being held liable in such a case. I suggest as well that the buyers discuss the issue with their lawyer or notary well in advance of the closing date.
Kim goes on to state:
"Unlike the City of Vancouver, which can only tax property, the provincial government can tax property owners directly. Therefore, if the BC speculation and vacancy tax is payable, the responsibility to pay rests with the property owner and doesn’t attach itself to the property. This means the tax follows the property owner who triggered it, leaving little chance of a nasty speculation tax surprise being visited on the buyer after they have closed on the property."
One of the many details involved when a home changes hands. As a home buyer or seller, know that I have your back, regardless of the issue.