The provincial government’s new speculation tax is causing fear and loathing in Cultus Lake. That’s because close to one third of the owners do not there live year-round and could be hit with a new bill for 2018 – one that will quadruple in 2019.
Harrison Hot Springs is another community in the Fraser Valley where many properties are recreational and not lived in full-time.
Some critics of the new NDP-government tax in both communities refuse to call it a speculation tax. One owner in Cultus calls it a “second house” tax, another in Harrison a “wealth” tax.
A Ministry of Finance tax information sheet was released in February to explain how the new annual tax will work. The tax is designed to target foreign and domestic speculators in B.C., “homeowners who have removed their units from B.C.’s long-term housing stock.”
For 2018, those impacted by the tax will pay $5 per $1,000 of assessed value. For 2019, that jumps to $20 per $1,000 of assessed value.
Most British Columbians are exempt from the tax. Anyone who lives in their home is exempt, and anyone who owns a second home but rents it out long-term is exempt. Even those who live in the province who are forced to pay will receive an income tax credit to offset at least part of the tax.
None of that is good enough for some holiday cottage, cabin and recreational condo owners.
Rick Williamson is a long-time Cultus Lake owner who does not live at the lake year-round, and he’s firmly opposed to the tax as it’s been presented so far.
“It is, in my opinion, a huge cash grab and would be more accurately described as a ‘Second House’ tax,” Williamson said in a recent email sent out to many Cultus Lake residents.
Estimates are that about 30 per cent of Cultus Lake leaseholders are not full-time residents. Some of those are rented out for the winter, but what fits the definition of “long-term” has not been explained yet by the Ministry of Finance, but almost certainly weekly or AirBnB rentals will not count.
Given some of the high values of properties at Cultus Lake, Williamson points out that a $1 million property will have a $20,000 tax bill for 2019. They will get an income tax credit the following spring, but if their provincial tax is less than $20,000, they will only receive that much.
“So if a husband and wife both work, both will need taxable income of approximately $95,000, to fully offset the $20,000 ‘speculation’ tax,” Williamson calculates.
Essentially, Williamson and other Lakers feel the so-called speculation tax is – inadvertently or intentionally – also targeting people who own recreational properties long-term and who clearly are not speculators.
“My wife and I worked very hard during our working careers and we bought based on lifestyle – not as an investment/speculation,” he said. “We purchased our place in the late 1980s so have had it for close to 30 years.
“To me, this is simply another easy tax grab by the government that will punish those of us who have worked hard and been successful.”
John Allen is the former mayor of Harrison Hot Springs and a long-time resident and property owner who agrees. He said a lot of people from other communities buy condos in Harrison to use as recreational properties that they later intend to retire to.
“They were making prudent investments and now they are deemed to be speculators by the powers that be in Victoria,” Allen told The Progress.
Allen said even the Harrison Beach Hotel is not entirely a hotel, but has about 60 units built under a strata plan. Many of those are used as recreational properties by non-long-term residents so will be subject to the tax.
He’s also baffled why Whistler was excluded from the speculation tax.
“That should have been the goose that lays the golden egg,” he said.
Allen also thinks it is no mistake or oversight that long-term, B.C. recreational property owners are caught up in a “speculation” tax. He thinks the government is assuming anyone who owns a second property must be wealthy.
“My sense is the long-term plan is really going to be, what I know from my years in the U.K., a wealth tax where they pick on a group of people they consider to be wealthy and they impose an annual tax on them,” he said.
Asked if the public should be sympathetic to the wealthy being taxed or people who own two homes, Allen said that anyone who pays all their bills and has enough money leftover to invest, and invests in a recreational property rather than the stock market, they should be encouraged not taxed.
“Really it’s an investment in B.C.,” he said.
Harrison Hot Springs Mayor Leo Facio said the speculation tax is a “major concern” and council was scheduled to talk about it at its Monday meeting,
Since the tax has been announced, but not fully finalized or enacted, Williamson is encouraging Cultus residents to send emails to MLA for the area Chilliwack-Kent’s Laurie Throness, and Finance Minister Carole James, Premier John Horgan and Green Party leader Andrew Weaver.
Throness brought the issue up in question period on March 12, referring to a man named Christopher who inherited a 1967 property in Nanoose Bay.
“Does the minister really believe Christopher is a foreign speculator?” Throness asked Finance Minister Carole James.
James responded: “I believe British Columbians deserve to live in the communities that they work in. I believe our 30-point plan to address housing is more than the other side did in 16 years.”