The Speculation and Vacancy Tax has been in force in British Columbia since 2018. By March 31 each year, owners of residential real estate in certain designated areas of the province must file a declaration setting out how they use the property and whether it meets one of the exemptions from the Speculation and Vacancy Tax.
We have acted on several files recently where we have found Crown Liens registered against title to real estate due to the Speculation and Vacancy Tax. In some cases, it was determined that a lien was filed simply because the owners did not file their Speculation and Vacancy Tax declaration. It appears that to this point, the BC government is not imposing penalties (at least in some cases) where the lien was registered merely for a failure to file a declaration. However, the Speculation and Vacancy Tax Act does permit for penalties to be imposed for a failure to file a declaration or for an incomplete declaration. Those penalties can be as high as $2500.
The penalties can be much greater if an owner of residential real estate owes tax and fails to pay all or part of it and, in the case of gross negligence, can be up to 100% of the tax.
A crown lien can delay or derail a transaction including a purchase, sale or financing involving real estate. While removal of the lien may happen relatively quickly, it can also take some time and could result in an owner breaching a contract or losing out on favourable interest rates or terms with their lender.
We encourage all of our clients to file their Speculation and Vacancy Tax declaration accurately and on time each year to avoid any negative repercussions.
Paul Tonita is a solicitor practicing in the areas of business law, real estate, estate planning and estate administration. His business experience includes assisting clients right from the beginning by discussing the different business structures, incorporating, buying and selling businesses, assisting with lending or financing needs, drafting and advising on contracts, and providing general advice to business owners.
His real estate practice involves working with developers to navigate the complex waters that are unique to each development and vary from municipality to municipality. Paul also assists both residential and commercial clients with purchases, sales, financing and leasing.
