B.C. Finance Minister Carole James recently argued that the province’s speculation tax is intended to improve housing affordability in areas where the need is most acute, while exempting rural cabins and vacation homes.
But students (as well as their parents) and retirees are still wary of the measure.
When Rick Smith’s son decided to move from Yukon to Victoria for college, he bought him a condominium back in October to avoid high rents, but the new tax means the property may turn out to be more of a financial burden than anticipated.
“Our contribution to his future is to put a roof over his head during his studies,” Smith told The Canadian Press. “This bloody tax is pushing us against the wall.”
Smith bought the condo with the intention that his son Kristian would live there for at least five years while studying at Camosun College. He said that while many northern students pursue studies in other provinces, his son preferred the bachelor of business administration program in B.C.
But the 1% tax will add around $400 per month to the $2,300 Smith is already spending on the mortgage and condo fees. “That is a real stretch for us,” he lamented.
Smith said he’s already suggested his son consider switching to another college in a more affordable city such as Calgary, Edmonton, or Winnipeg.
“I think his preference, unless he can’t afford it, is to stay in B.C. … He’s really keen on putting his roots down there,” he said, noting the heavy irony if the tax intended to improve affordability for young professionals is the trigger that would force his son to leave.
Read more: Commentary: B.C. speculation tax will only widen gap between haves and have-nots
Retiree Bryant Stooks said that he and his family will likely have to give up the beloved summer home on Vancouver Island they’ve had for more than two decades.
Stooks, who lives full-time in Phoenix, Ariz., spends 4 to 5 months at his North Saanich home every year. He bought the property not as a financial investment but because while visiting the area on vacation with his wife, “we just fell in love with it.”
He believes that communities stand to lose if people like himself, who couldn’t afford a tax hike, have to leave. “We spend money on food, restaurants, entertainment, we bring up friends. There is a large contribution to the Canadian economy.”
A tax of 2% on the house’s assessed value could cost Stooks up to $60,000 annually, he said, meaning he’d have no choice but to sell. “Although I love it, it’s my second home, I just can’t afford to pay that every year.”
While he said it’s understandable the government is trying to curb speculation to cool the soaring housing market, long-term residents shouldn’t be penalized.
Stooks isn’t putting the house on the market yet, holding out hope that the government may reconsider.