'Don't think it's fair': Speculation tax exemption created for some B.C. commercial property tenants

VANCOUVER -- An exemption has been introduced for dozens of B.C. businesses who were charged a speculation vacancy tax for the air space above their leased spaces.

Finance Minister Selina Robinson discussed the new exemption Thursday, a couple of weeks after some businesses reported being dinged on empty space. 

Dan Rodriguez, the owner of Las Margaritas in Kitsilano, told CTV News Vancouver earlier this month that his bill went up by $6,000 this year because of the tax. Rodriguez does not own the land, but he pays taxes and maintenance fees as part of the lease agreement with his landlord.

Robinson explained some commercial property owners have opted to rezone their property for a split assessment, specifically marking the air space above their ground-level unit as residential.

Robinson says that option is meant for those planning to redevelop and put homes above their commercial space, which triggers the speculation tax if that development doesn't go ahead.

"It's landlords that have taken the opportunity to rezone the unbuilt air space above their commercial property," she explained.

"They receive, of course when it's zoned residential, a lower tax on that space and then they don't seem to be continuing the development process."

Making matters worse, some property owners' lease agreements pass those taxes on to their tenant, like for the owner of Las Margaritas.

"We need more housing and unfortunately these commercial property owners are passing along this speculation and vacancy tax through the triple-net lease agreement onto their tenants and that's not fair," she said.

The exemption specifically applies to commercial tenants in a triple-net lease agreement that have rezoned airspace above their rented unit.

Robinson says their data shows there are "fewer than 65 properties that this affects." While Robinson didn't have a regional breakdown of those properties, she said they were mostly in the Greater Vancouver area.

Business owners will need to apply for the exemption, but Robinson said they're trying to keep that process "as simple as possible."

Properties that are in the process of redevelopment also have an exemption from the tax. As well, there used to be a vacant land exemption, but that expired in December 2019 and owners are now also being charged for empty space on residentially zoned property, not just for empty units or homes.

"We don't think it's fair that tenants should have to bear the cost of the speculation and vacancy tax when their commercial landlord made the choice to indicate redevelopment of their properties … as residential and then not continue on that path," Robinson said.

The finance minister also said the province is working on a more permanent solution, adding that this exemption is only expected to be in place for a year.