No one is particularly happy about the new speculation tax that Kelowna homeowners must deal with, but it’s important that you know what to do and whether you’re affected by it. Today, we want to share five potential options that can help you manage this tax without giving up your investment property.
Adding a Suite or Carriage Home
Does your home have an extra suite or the potential to add a suite, a guest house, or a carriage home? According to the law, an owner can only rent a residence in a building for the whole building to be exempt from the speculation tax. Including a suite or a carriage house to your property would allow you to generate extra rental revenue, avoid the giant tax, and remain living in your main house at all times.
Moving in a Family Member
You can allow a family member to occupy the property as their primary residence. The legal clause addressing a “non-arm’s-length” tenant would apply to this situation. Your family member doesn’t need to have a written lease in place. Your family member doesn’t even need to pay rent.
Short Term Rental
If you’re using your property as a vacation home, you might want to turn it into a furnished short term rental property. You could make it available to an executive who is in town for a few months and looking for a furnished rental, or you could offer it to someone building their own home. If you provide the property for six months cumulatively as a rental, you can make some money and save on taxes. These types of tenants also take excellent care of the properties they live in. You can have the home professionally cleaned before you use it, and you don’t have to provide your own bedding and towels.
Attracting a Caretaker Role
Another option is to advertise your property at a discounted rent for anyone interested in maintaining the property and taking on management duties. You’d have to pay someone to take care of these things anyway or do them yourself. Having a caretaker will put you in a stronger tax position.
Move to a Non-Taxable Region
Maybe you cannot abide the idea of tenants living in your home. If that’s the case, you can make a lateral move to a different community, where you aren’t taxed. On the lake, you can live in Peachland, Summerland, and Penticton to the south of Kelowna. North of Kelowna, options include Fintry, Lake Country, and Vernon. You could sell your home in Kelowna and buy something just as nice while earning a profit on your sale.
When you’re committed to staying in Kelowna, you can consider selling your home and relocating to a property on leasehold land, which belongs to First Nations. You can avoid the speculation tax, and you also won’t be responsible for the property transfer tax.
With the new tax laws, you need to be strategic. If you’d like to talk more about what this means for you, please contact us at Vantage West. We’d be happy to tell you more and share some ideas for saving money. Homeowners need to apply for exemptions by March 31. If you don’t apply or you don’t qualify, those tax bills will be due on July 2.