Property tax is a major income for local governments and one of the largest taxes paid by households. The rate varies between municipalities.
With property tax increases on the way, West Vancouver homeowners are worried. Currently, homeowners can expect to pay an extra $236 this year.
Property Transfer Tax
A property transfer tax is a tax that you need to pay when you buy or acquire an interest in a property. It is a 1% to 3% tax and you have to file it with the Land Title Office. The amount you need to pay depends on the fair market value of the property and there are some exemptions.
There is also an additional property transfer tax for non-residents who purchase residential property in the Greater Vancouver Regional District. This additional tax is 15% of the fair market value of the proportionate share that the foreign entity has in a residential property.
This additional property transfer tax is in addition to the existing 1% to 3% tax that applies to both resident and non-resident foreign buyers purchasing property in the Greater Vancouver Regional District. This new tax is intended to discourage foreign buyers from evading the existing tax and to ensure all foreign entities report and pay this tax as required.
The West Vancouver speculation and vacancy tax was introduced by the NDP government in 2018. It is designed to raise money for affordable housing projects as well as discourage property owners from leaving secondary homes sitting empty while their primary residences are occupied.
According to government data, foreign owners, satellite families (where some members of a family live locally but the breadwinner is typically based abroad) and ownership involving a mix of those – including those who hadn’t declared their ownership status – accounted for two-thirds of those paying the tax in West Vancouver.
To calculate the property transfer tax, you need to know the purchase price of your home and its fair market value on the day it was registered with the Land Title Office. If you’re buying a new home, you need to include the fair market value of any upgrades or additional costs. You can also use our property transfer tax calculator to get an estimate of the PTT amount you may owe.
If you’re a non-resident, you should also check whether the First Time Home Buyers’ Program and the Newly Built Homes Exemption program apply to you. These programs can reduce or eliminate the amount of property transfer tax you will need to pay. You can find more information about these programs here.
Property Tax
Property taxes are a municipal tax that property owners pay each year to support the city’s services. The money collected from these taxes is used for community centres, infrastructure, public transit, and other city services.
The amount of money that you pay in property taxes depends on the amount of property that you own and its location within the city. The higher the value of your property, the more you will pay in property taxes each year.
In West Vancouver, the total property tax bill for an owner of a median single-family home assessed at $1.7 million is $6,600. This is the highest of any city in the region and is more than double what you would pay in White Rock, New Westminster and North Vancouver, which have property tax rates at about half as much.
West Vancouver’s property tax rate is determined by how much revenue is needed to pay for the city’s budget. It is a combination of money from the city’s operational budget, the Asset Levy and property tax on residential properties.
The mayor of West Vancouver wants to get the city more control over foreign homeowners who own empty homes. She has said she would like to have the power to impose an additional vacancy tax on empty homes.
This could help reduce the number of vacant homes and provide affordable housing for West Vancouver’s growing population. She says the city has 1,700 empty homes — about 10 per cent of its stock — and that it is a serious problem.
She added that she thinks the province should consider imposing a vacancy tax on vacant properties and would ask for legislation to allow the municipality to do so. But she is not optimistic that it will happen.
Another major driver of property tax increases in the metro area is utility fees. They are a line item on the property tax bill that covers water, sewer and garbage.
A report released this week by the province showed that utility fees in Vancouver are up 4.5 per cent this year, or about $26 on the average household’s tax bill of around $620 a year.
Empty Home Tax
In an effort to address the city’s housing crisis, Vancouver Mayor Kennedy Stewart has proposed raising the empty homes tax from three per cent to five per cent in 2023. The move would double the number of annual compliance audits and make it more difficult for owners of properties with legitimate reasons to remain vacant.
This is in addition to the speculation and vacancy tax, which targets foreign buyers and domestic speculators who don’t pay their fair share of taxes despite owning B.C. property, including those who own homes overseas, and have “satellite” families, as well as Canadian citizens and permanent residents whose income is derived from abroad.
The tax is designed to free up homes that can be rented full-time instead of sitting empty and to encourage more owners to put their properties on the market, which in turn would increase available housing stock and decrease rents for Vancouverites. The tax also helps the city reinvest net revenues into affordable housing initiatives and is one of many strategies used to address Vancouver’s burgeoning housing shortage.
However, the tax is only applied to Class 1 residential properties – these are single-family residences, multi-family residences, duplexes, apartments, condominiums and other buildings such as nursing homes and daycare facilities. Owners must declare their properties by submitting a status declaration, which includes the valuation of the property and whether it was unoccupied for six months or more during the previous fiscal year.
There are a number of exemptions to the tax. The most common are:
1. Property Limited in Use – If the property is restricted for a specific use, such as vehicle parking or the shape of the property precludes it from having a residential building constructed on the site, the empty home tax does not apply to the property.
2. Owner Transferred Legal Ownership – If the property was transferred to a new owner during the previous year, or if the owner died and a grant of probate or administration of the estate was pending, then the property will be exempt from the empty home tax.
School Tax
West Vancouverites are being hosed by the extra layer of school tax that the province imposed on higher-valued properties this year. The extra 0.2 per cent on the residential portion between $3 million and $4 million, and 0.4 per cent for anything over $4 million, is hitting owners of high-end houses harder than it’s hitting anyone else in B.C.
West Vancouver council voted to approve the tax, which is meant to cool the property market and raise money for affordable housing. The district’s finance staff estimate that 7,100 homes will be hit by the tax – almost half of all owned homes in West Vancouver.
The 0.2 per cent tax is a small amount compared to some homeowners’ annual property taxes, but it does add up quickly. Those with more than $3 million in assessed value will pay an extra $7,680 on top of the regular school tax – a whopping $11,595 on average.
It’s the extra layer of tax that weighs on the minds of city councils as they wrestle with budget decisions this year, despite the fact that homeowners in the Lower Mainland are paying a huge share of the province’s school-tax dollars. Mayors in Burnaby, Surrey and the Township of Langley said they want to make sure the money goes toward local services, but that’s not an easy thing to do when it comes to calculating what the province might actually get back from the extra school-tax revenue.
That’s a problem, as the province doesn’t have an accounting system that makes it easy for councillors to track what the government is doing with all the money. As a result, the extra school-tax money can easily be lost as it flows through the system to other municipalities and regions.
When that happens, it can cause councils in those cities to rethink their decisions, or worse, cut service or reduce the overall budget. That’s not the best way to serve residents, particularly those who have been pushed out of the housing market and are looking at a fresh start in a new city.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.