The government of Kelowna stated in a press release yesterday that it will work alongside other municipalities to oppose B.C. government’s speculation tax proposal.
This speculation tax is part of the B.C. government’s 30-point plan to address the housing unaffordability crisis. Its main goal is to discourage housing speculation in order to keep homes from being left vacant by investors. The tax ranges from 0.5% on secondary homes left vacant by B.C. residents, to 2% on properties owned by foreigners.
This proposed tax, if passed, would apply to properties in the Lower Mainland, Vancouver Island, Kelowna and West Kelowna. However, the City of Kelowna has expressed concerns about unintended consequences of the tax and has remained skeptical about whether or not the tax will actually deter speculators.
“Speculators, because they don’t hold a property for long, would be minimally affected by this tax. Instead, it would be long-time home owners who would pay, year over year, for choosing to spend time and money in B.C.”
The city states that one of the flaws of this tax is its limited geographical scope. As it stands, speculators could simply purchase properties in neighbouring communities not affected by the tax.
The Okanagan Mainland Real Estate Board (OMREB) is also hesitant to endorse the tax. Its president, Marv Beer, argues that the tax doesn’t target speculators who flip properties in a short time-frame and therefore wouldn’t be impacted for very long.
“Speculators, because they don’t hold a property for long, would be minimally affected by this tax. Instead, it would be long-time home owners who would pay, year over year, for choosing to spend time and money in B.C.,” he stated.
“Ironically, it’s possible that the tax would encourage speculators to set their sights on homes under $400,000, competing with legitimate buyers for lower-cost homes. If the government really wanted to go after speculators, it could apply a levy to homes sold within a short time of being purchased.”
Beer later mentioned that although the B.C. government claims the tax would primarily affect foreign buyers, almost two-thirds of those who end up paying the tax would be British Columbians.
Though he’s glad that the government has included a list of exemptions from the tax, he fears that a growing list of exemptions would create an administrative nightmare with very little effect on housing affordability.