Speculation and vacancy tax relief for non-existent homes
The provincial speculation and vacancy tax (SVT), introduced in 2018, applies to airspace above buildings classed as residential. For example, the SVT would apply to potential homes in a zoned but unbuilt condominium tower above retail.
To provide commercial tenants and landlords with relief, the Minister of Finance, Hon. Selina Robinson, announced on April 29, 2021 that the provincial government is temporarily, for one year, removing the SVT liability for 2020 for property owners that meet certain conditions.
Both property owners and tenants can now apply for the remission. This ensures tenants don’t have to wait for the property owner to apply.
The exemption applies only to commercial tenants in a triple-net lease agreement that have rezoned airspace above their rented unit and to properties that are in the process of redevelopment.
In past years, property owners were able to classify their commercial properties as residential if they planned to develop homes in the unbuilt airspace above their buildings.
Property owners were then taxed at the lower residential rate. However, property owners who didn’t proceed with development were assessed the SVT.
Commercial landlords typically pass on the cost of the SVT to tenants through triple-net lease agreements. Landlords also pass on the costs of the additional school tax and higher municipal/provincial property taxes for airspace.
Remission application background
- The lease must be entered into prior to April 29, 2021 and be valid at the time of application.
- The property must contain residential land that is vacant and may not contain a residence or any portion of a residential improvement.
- The property must contain a class 5 or class 6 commercial building and have a commercial tenant in a lease that requires the tenant to pay the speculation and vacancy tax.
- The property owner must have declared and be liable for the SVT for 2020.
- A property owner must notify each tenant that is in a triple net lease before application and a tenant must notify all owners before application.
To apply, eligible owners or tenants should contact the Ministry of Finance at 1-833-554-2323.
The government is working with the Union of BC Municipalities and stakeholders to find a permanent solution.
In October 2019, Liberal municipal affairs critic Todd Stone tabled Bill M-226, Assessment (Split Assessment) Amendment Act, recommending a split assessment for the residential and commercial components of a potential development site for tax assessments. This bill didn’t pass.