Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.



Q. Will the vacancy tax in British Columbia spread through to the rest of the country?



A. Prime Minister Justin Trudeau announced in September a proposal to add a 1% annual countrywide tax on homes owned by non-resident, non-Canadian buyers as part of his re-election campaign.



This so-called vacancy and speculation tax would be modeled on a similar tax in British Columbia, according to an explainer by the Canadian Liberal Party. B.C. charges a 2% tax on foreign owners, which has significantly curbed foreign investment since it was implemented in 2016.

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In addition, Vancouver implemented a tax in 2017 on homes left vacant for more than six months per year. Such properties are subject to a tax of 1% of the property’s assessed taxable value, according to the City of Vancouver’s website.



The taxes are meant as a way of “dealing with housing speculation by foreign owners, which drives up housing costs,” the party said.



To that end, it’s working, said Romana King, director of content at Zolo, a Canadian online marketplace and brokerage.



“We can very much point to the Vancouver area and say, since the introduction of the first tax, the market has cooled quite considerably,” she noted.

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Mr. Trudeau won his bid for reelection in October, but has yet to make any further announcements regarding the tax proposal. However, Ms. King expects he will do so in the coming months.



“I'd be surprised if Trudeau rolled back on this,” she said, adding that it’s likely the plan, which also includes a first-time home-buyer incentive, will be implemented in phases.

Requests for comment left with the prime minister's office weren't immediately returned.



Ms. King noted that the amount of the tax could shift from 1% to a higher number as it comes closer to reality.



“That number could change. It could be 1%. It could be 5%. It could be tiered,” she said. “We've seen that happen before where they announced something and then they come out with a plan that's far more intricate than we first assumed.”

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