Since 2018, both our provincial government and the City of Vancouver have decided to harness their taxation power by creating new taxes to drive property owner behaviour in the direction they want: to discourage a property from being left vacant when it could be rented, and to discourage speculation in real estate.

I’m not wading into a discussion on whether these taxes are a good idea from a policy perspective. But given that the province’s speculation and vacancy tax and the City of Vancouver’s empty homes tax are a fact, we should consider how they affect buyers and sellers and the deals we put together for them. Property owners in the City of Vancouver with vacant homes are liable to pay both taxes.

• Learn about the provincial speculation and vacancy tax (log in required).
• Learn about Vancouver’s empty homes tax (log in required).

Both taxes are triggered by a home’s occupancy during the taxation year. The city doesn’t have the power to levy taxes directly on property owners; it can only tax property. This matters because the tax, if applicable, attaches to the property. If ownership changes and the tax has been levied (but not paid) by the previous owner, there can be a dispute about who has to pay it when it becomes due.

There are a multitude of clauses to help the parties deal with Vancouver’s empty homes tax on WEBForms. Check these out and make sure you choose the right one. Better yet, suggest in writing that your clients get advice from their conveyancer well in advance of putting a deal together. If there’s any doubt at the time you put a deal together, I suggest you insert a subject clause to give the parties a chance to talk to their lawyers. If the property is outside Vancouver, but within the parts of BC where the speculation tax applies, your advice will remain the same; namely, “Talk to your lawyer about the tax and whether it applies.”

But why aren’t there speculation tax clauses on WEBForms? Because unlike the City of Vancouver, which can only tax property, the provincial government can tax property owners directly. Therefore, if the speculation and vacancy tax is payable, the responsibility to pay rests with the property owner and doesn’t attach itself to the property. This means the tax follows the property owner who triggered it, leaving little chance of a nasty speculation tax surprise being visited on the buyer after they have closed on the property.

I received a note about incomplete DRPO forms from a colleague instructor who also manages a brokerage. He’s astounded at the number of forms he sees that are incorrectly filled out.

He says, “About half of the forms I get have been signed, but they either have a checkmark in the boxes or nothing.”

Say what?

First, a check mark in a box instead of initials is not a best practice. Get initials.

Second, the form was built to create a standard written record showing whether offers are to be delayed and/or whether buyer agents can attend the presentation of their offers. The form doesn’t have much meaning if it is just signed without the appropriate boxes being initialled. I think an incomplete form like that would have the Professional Conduct Committee scratching its head, don’t you? And that’s not a good thing.