Kris Smith is photographed at home in Victoria, B.C., on Wednesday, March 28, 2018. His parents who live in the Yukon bought the unit for him while he completes school may be forced to sell due to B.C.’s new speculation tax. THE CANADIAN PRESS/Chad Hipolito

Retirees, out-of-province residents calling B.C. ‘speculator tax’ unfair

Kris Smith says he may be forced to sell due to B.C.’s new speculation tax.

When Rick Smith’s son decided to move from Yukon to Victoria for college he bought him a condominium to avoid high rents, but a new provincial tax means the property may turn out to be more of a financial burden than anticipated.

“Our contribution to his future is to put a roof over his head during his studies,” Smith said Wednesday. “This bloody tax is pushing us against the wall.”

Finance Minister Carole James released details of what the government is calling a speculation tax on Monday that predominantly affects properties owned by non-B.C. residents.

James said the tax is intended to improve housing affordability in areas where the need is most acute, while exempting rural cabins and vacation homes.

Areas covered by the tax include Metro Vancouver, Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack, Mission and the Capital Regional District around Victoria on southern Vancouver Island, excluding the Gulf Islands and Juan de Fuca.

Canadians living outside B.C. who own a property in these areas will be subject to a one per cent tax based on the assessed value, while foreign owners will pay two per cent. Owners of properties living outside the province can avoid the tax by renting them out.

Smith bought the condo last October with the intention that his son Kristian would live there for at least five years while studying at Camosun College.

He said many northern students pursue studies in other provinces, and his son preferred the bachelor of business administration program in B.C.

But the one per cent tax will add about $400 per month to the $2,300 he is already spending on the mortgage and condo fees.

“That is a real stretch for us,” he said.

Smith said they’ll likely have to sell, but that will be a financial hit too because of the transfer tax and penalties for breaking his fixed mortgage agreement.

Selling would also put his son back into the expensive and competitive rental market.

Smith said he’s already suggested his son consider switching to another college in a more affordable city such as Calgary, Edmonton or Winnipeg.

“I think his preference, unless he can’t afford it, is to stay in B.C. … He’s really keen on putting his roots down there,” he said, adding it’s ironic if the tax intended to improve affordability for young professionals is the trigger that forces his son to leave.

Related: Pressure on Carole James to ease B.C. speculation tax

The Smiths aren’t alone in grappling with the implications of the tax.

Bryant Stooks and his family say they will likely have to give up the beloved summer home on Vancouver Island they’ve had for more than two decades.

Stooks is retired and lives full time in Phoenix, Ariz., but spends four to five months at his North Saanich home every year. He bought the property not as a financial investment but because while visiting the area on vacation with his wife, ”we just fell in love with it.”

Related: Real estate agents brace for speculation tax impact

He said communities stand to lose if people like himself, who couldn’t afford a tax hike, have to leave.

“We spend money on food, restaurants, entertainment, we bring up friends. There is a large contribution to the Canadian economy,” he said.

They participate in the local community, too, supporting fundraisers for the local hospital and community centre.

A tax of two per cent on the house’s assessed value could cost Stooks up to $60,000 annually, he said, meaning he’d have no choice but to sell.

“Although I love it, it’s my second home, I just can’t afford to pay that every year.”

Stooks said his situation isn’t unique and he knows of a number of families in the Phoenix area that live part time in B.C. to escape the summer heat — the opposite of Canadian snowbirds.

While he said it’s understandable the government is trying to curb speculation to cool the soaring housing market, long-term residents shouldn’t be penalized.

Stooks isn’t putting the house on the market yet, holding out hope that the government may reconsider.

Selling it could pose a challenge as well, he said, since buyers from outside B.C. could also be subject to the tax.

Related: ‘Not well thought out:’ Arizona family slams B.C. speculation tax

Bill Veenof, chairman of the Regional District of Nanaimo, said he raised concerns with the finance minister about the effect the tax could have on property values for local owners and on future development.

“It creates a taxation-based, unlevel playing field,” he said about the tax only applying to select areas.

“Developers look to many funding sources, and one of those sources is money from away. If that dries up, that money will likely go to our neighbouring regional districts and we’ll see a downturn of development opportunities.”

Veenof said he was pleased the government heard his concerns and left the regional district out of the tax, but added with Nanaimo and Lantzville are subject to the tax, debate will continue.

“We’ll have to see how it works out, but it’s potentially challenging,” he said.

Linda Givetash, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Moms of those killed by illicit opioids take to B.C. Legislature in call for action

Moms Stop the Harm, a nationwide network of families who have lost loved ones to overdoses rally

Trudeau announces bioregional oceans protection agreement in Prince Rupert

Agreement announced in partnership with 14 central and north coast First Nations

115 new wildfires burning across B.C. due to 19,000 lightning strikes

More fires expected to start today, says BC Wildfire Service officials

Local artist Danika Naccarella commissioned to design artwork for Northern Sea Wolf

The Sea Wolf symbolizes family, loyalty and the protection of those travelling their waters.

‘Daddy bonus’ common in B.C. workplaces, study finds

UBC researchers say dads don’t have to be number one in the office to get a raise

VIDEO: Canadian toddler caught practising hockey skills in crib

Eli Graveline is getting praise from far and wide as the internet freaks out of cute throwback video

Man shot dead in Surrey ID’d as hockey coach and father of two

Murder of Paul Bennett – a respected Peace Arch Hospital worker and ‘champion of sport’ – ‘not random’

Serial killer Robert Pickton transferred to Quebec: victim’s family

Pickton was convicted in December 2007 of six counts of second degree murder

Canadian Syrian children’s choir not to attend festival over fears about U.S. travel

Many kids are recent immigrants from countries covered by Trump travel ban

B.C. teacher ends Jeopardy! winning streak, taking home US$69,000

Ali Hasan, from New Westminster, has been gaining fans as a “one-man invasion,” says Alex Trebek

Jett Woo highlights 5 Canucks choices on Day 2 of NHL entry draft

WHL star out of Moose Jaw tabbed in Round 2

In a matter of hours, women in Saudi Arabia will be allowed to drive

Change was announced as a royal decree in 2017 by Crown Prince Mohammen bin Salman

Feds announce measures to protect endangered whale species

Canada’s Whale Initiative is part of the federal government’s $1.5 billion Ocean Protection Plan

Most Read