The BC government has recently announced new taxes intended to improve housing affordability in its latest budget, you can read that here on my blog. Sadly, the new tax measures will likely have the opposite impact by making owning and renting more expensive. Here is some information that was originally prepared by the Canadian Mortgage Brokers Association of BC and the letter drafted by CEO Samantha Gale.
The school tax is targeted at residential properties valued over $3 million, but with house prices typically doubling every 7 to 10 years, this tax will soon apply to all single family homes and many strata units in urban areas.
As we all know, governments never cancel taxes. Once implemented, they are here to stay.
This impacts everyone, including renters.
The tax costs, when applied to rental housing, will likely be downloaded onto tenants paying rents.
As an example, one property owner with a modest, older rental home, which happens to sit on Vancouver’s pricey West Side, is assessed at $6 million, with the value being almost exclusively in the land. The house is clearly not an “expensive” home, and possess a remarkably high value simply because of its location.
The house contains two rental suites rented to long term tenants at a monthly rent, which would be considered “affordable” by most working British Columbians. The owner has no intention of selling the property or terminating the long-term tenancies that gross approximately $3,200 per month. However, the new tax will increase costs to the owner by about $830 per month by doubling its annual property tax owing.
The owner is not in a position to absorb this cost and will now be faced with a decision to either the sell the property or pass the costs onto the tenants. A new buyer would certainly evict the tenants and construct new housing on this particular lot, thereby removing two units from the rental pool.
CMBA – British Columbia has appealed to the BC government’s Finance Minister, the Hon. Carol James, outlining how this new tax policy actually decreases housing affordability – across their entire constituent base – and works in opposition to their own stated affordability goals.