Elected representatives and real estate agents in the Nanaimo region fear a vacant home tax proposed by the B.C government could be detrimental.
The speculation tax included in the 2018 budget would apply to vacant and short-term rental properties owned by non-B.C. residents, with principal residences and long-term properties exempt, the province said in a press release. A non-refundable income tax credit would be available to “offset the tax” for residents of B.C., it said.
RELATED: RDN wants speculation tax called off
The Regional District of Nanaimo board expressed concern at a March 13 meeting. Bill Veenhof, RDN board chairman, said there has been no consultation or communication between the province and RDN and the district will be hamstrung, as it doesn’t apply to neighbouring districts. Despite the tax credit, it could be problematic, he said.
— Karl Yu (@KarlYuBulletin) March 13, 2018
“In the pureness of what an income tax credit is, people from B.C. who have two homes, who are less well off than others that have two homes will pay more tax, so it’s a regressive tax, so that is a concern,” said Veenhof. “The other concern that is shaping up in Kelowna is the reduction of property values … that really hasn’t generated traction here, but when people understand that their property values are going to be driven down, that’s real money, it’s people’s net worth, it’s something that will affect, negatively, everybody across the RDN.”
Kaye Broens, Nanaimo realtor and Vancouver Island Real Estate Board president-elect, said the tax’s full effect isn’t known yet, however, her colleague saw a customer buy in Ladysmith because the tax isn’t applicable there.
“At the end of the day, what we can say is it does appear the government is concentrating more on dampening demand instead of increasing supply,” said Broens. “We believe that the speculation tax focuses on the wrong side of the housing equation simply because Vancouver Island is a popular destination for retirees and would-be retirees from outside the province, and many of whom buy a property before they’re ready to retire … [it] could discourage these buyers who are investing in the province through property purchases and consumer spending.”
— Karl Yu (@KarlYuBulletin) March 14, 2018
Leonard Krog, Nanaimo MLA, said the government wants to deal with the issue of homelessness and housing and affordability crisis. The RDN was included due to its housing market, he said.
“Obviously it was the speculation and the foreign buyers tax was initially Vancouver only,” said Krog. “The Capital Regional District, the Regional District of Nanaimo and Kelowna area are places where prices have gone up quite dramatically and where there is serious housing shortages … the rental market here is very, very tight as you know and housing costs have gone up quite dramatically in comparison to what they were previously.”
Nanaimo Mayor Bill McKay told the News Bulletin that a prospective resident told him recently that he “quashed” the purchase of a $1 million condominium because of the uncertainty.
The B.C. Ministry of Finance was contacted, but wasn’t able to comment by press time.
Krog noted that the tax isn’t law yet and this is the time to comment and pass views on to the government.
The RDN board unanimously voted to correspond with the ministry, asking it to terminate the tax, and recommended bringing the issue before both the Association of Vancouver Island and Coastal Communities and Union of B.C. Municipalities.
The B.C. government anticipates the tax will amount to $5 per $1,000 of assessed value in 2018, which will increase to $2o per $1,000 in 2019.