B.C. Speculation and Vacancy Tax for returning citizens and new immigrants

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
Bumble
Posts: 16
Joined: Tue Apr 23, 2019 1:07 am

B.C. Speculation and Vacancy Tax for returning citizens and new immigrants

Post by Bumble »

I own a home in B.C. that was rented out the whole time when I was living in the U.S. Last October (2019), I moved back to Canada and re-occupied the home. As I was filing the B.C. Speculation and Vacancy Tax (SVT) declaration a few days ago, I was surprised to discover that while I will be exempted from the tax for the 2019 tax year (since the property was rented out for at least six months in 2019), I will owe the tax for the 2020 tax year since I am considered a member of a "satellite family" based on the B.C. government's definition!

It turns out that the B.C. government determines whether I'm a member of a satellite family for a certain tax year based on whether at least 50% of my total household income was reported to CRA in the previous tax year. So, I'm considered a member of a satellite family for the 2020 tax year since I reported less than 50% of my total household income in my 2019 CRA tax return.

See: https://www2.gov.bc.ca/gov/content/taxe ... ide-earner
"The reported and unreported income used are from the year before the speculation and vacancy tax year."

But 2019 is the year I returned to Canada. Since I re-settled during the last few months of the year, the majority of my household income won't be reported to CRA for the 2019 tax year. So, this makes me a member of a "satellite family" and will be subject to the SVT equal to 2% of the assessed property value for the 2020 tax year.

The problem, which may also apply to new immigrants who purchase their homes in the year they settle in Canada, is described in this news story:
https://www.vicnews.com/news/new-b-c-re ... cancy-tax/

I can think of two solutions, both of which don't make much sense, but seem to be the only ways I can minimize or eliminate this tax liability:

(1) Report all 12 months (instead of just the last three months) of my 2019 household income to CRA for the 2019 tax year (so I would pay more tax to CRA but at least won't have to pay the SVT); or
(2) Rent out my property for six months this year and find somewhere else to live during that period.

Can anyone think of any other solution?
Post Reply