The City of Kelowna is adamantly opposed to a speculation or “vacant home” tax as introduced by the provincial government in last month’s budget.
But, if a form of tax is introduced in the fall as promised, the city wants taxes raised in Kelowna to stay in the city for affordable housing initiatives, “as a means to assist with housing affordability and homelessness challenges.”
The request is part of a lengthy report on the tax and its impact on Kelowna requested by council.
It further suggests any tax have provincial geographic equity, and recommends the province consider a transactional speculation tax, which would penalize true speculators who flip properties after a short period of ownership.
The report suggests the tax, in its current form, could create significant uncertainty in Kelowna.
“The associated implication that out-of-province buyers are not welcome in certain communities compared to others, and uncertainty around tax rules until they have been fully adopted, may have a significant impact on Kelowna’s real estate market in 2018,” the report states.
It further surmises some buyers could be driven away, to the benefit of other communities such as Lake Country, Penticton and Vernon, where the tax is not being imposed.
The report also suggests one benefit of the tax could be the high-end rental market.
According to the 2016 census, about 6.1 per cent (3,530) of all private dwellings in the city are “unoccupied.”
Estimating half of those are owned by B.C. residents and would likely be unaffected by the tax, the city says non-resident owners of the other 50 per cent would have to sell, move to Kelowna and occupy the property, put it up for rent or pay the tax.
The city assumes that could mean as many as 900 rental units could open up, increasing the rental market.
Council will debate the report Monday.