Speculation Tax Declaration
In British Columbia each year owners of property in BC are required to declare for the Speculation and Vacancy Tax. Each owner of the property is required to declare what their status with the property is. Are they residing in the property as their primary residence, renting the property, or is the property vacant.
As an owner of a rental property you are exempt from paying the tax if the property is rented. When making your declaration you need to indicate the property is occupied by a renter. There may be a requirement to supply proof of the tenancy. The declaration is required to be made by the end of March each year. The BC Government mails the declaration document to each owner starting in January of each year. If you are not sure if you have received the declaration documents you can contact the speculation tax department and they will advise you where they are mailing the documents. If you reside in the property you would receive them at the property. When you are the owner of an investment property you want to ensure the documents are being sent to an address you will receive them at. This is very important for non resident owners. You may need to change the mailing address at Land Title and BC Assessment to ensure the documents are being sent to the correct location for you.
Failing to declare may result in the government assessing the property and applying the speculation tax. Each month the tax is not paid, the government will apply interest to your account. If you fail to declare at the appropriate time, the government does allow for a declaration to be made at a later date. There is a time limit of three years after the year ending for which the declaration is required to be made, for which you can make a declaration. If a declaration is not made by this point the government won’t accept a declaration.
It is important to know the requirements of the taxes you are required to pay on your investment properties. We suggest you obtain professional tax advice regarding your investment.
Need assistance managing your rental property? contact us for an evaluation of your needs.
Cartref Properties specializes in managing rental units located within Strata Corporations.
www.cartrefproperties.com
Ten Day Notice
What happens when tenants fail to pay rent or utilities?.
Cartref Properties will contact the tenant and discuss the non-payment, explaining their payment has been declined and politely request they re-submit payment. In order to protect the owner’s interest with regards to the tenancy, we will issue a ten day notice to the tenants. A ten day notice provides tenants five days to make payment of the rent, failure to do so requires they vacate the property after the ten days. There are additional days for service as outlined in the Residential Tenancy Act depending on the form the notice is served.
Cartref Properties sends notices by email and registered mail. In order to send it by email you must have the tenants permission to use that email for service of official documents. Sending by email adds three days to the five days of notice. Cartref Properties officially sends the notice by registered mail which adds five days to the notice period for delivery and it provides a tracking number for confirmation of delivery.
When a tenant pays within five days, the notice ceases to exist and the tenancy continues. When the tenant fails to pay within five days an owner can choose to accept the funds reinstating the tenancy, or continue with the eviction of the tenants. Our experience shows us it is very uncommon for a tenant to vacate after ten days. In this case, an application to the Residential Tenancy Branch would be required to request an order of possession. After an order of possession is obtained we would move forward with the eviction process to vacate the tenants. Vacating a tenant may require the involvement of a bailiff. Bailiffs are the only people in BC who can make a person physically vacate a property.
The entire process of non payment of the rent and or eviction can be long and time consuming for both parties.
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Why is it called Property Management?
I have been involved in property management since 2009. The industry calls it property management yet we often forget the most important fact regarding property management. I have never spoken to properties about renting themself out and how that works. Properties don’t interview prospective tenants to determine if they are suitable for the property. Properties don’t miss rental payments, they don’t complete repairs to the properties.
Property management is the management of people. People own properties, people rent the properties. People complete repairs at the properties.
A property manager's role is to manage all the people involved in the transaction of managing the rental property. When the people are managed effectively, the property manages itself. Technology is a great tool to assist in managing properties, but it can not eliminate personal interaction. Having open communication with tenants and owners is important for a positive tenancy for your investment property.
How can a property manager be more effective at managing a property through people management? Interview owners of the property to clearly understand their expectations of managing their property, ensuring theirs and your expectations match is very important.
Never rent a property without meeting the people who are applying to rent the property. This provides the opportunity to interview the prospective applicants. Calling references and asking detailed questions allows interaction to verify the information provided by the applicants. Many services offer the ability to perform an online check of prospective tenants. I have found it better to speak to people and verify the information provided before using online services to verify applicant details. The online information does not always tell the entire story.
“Property Management” is about the management of people.
Need assistance managing your people? contact us for an evaluation of your needs.
Cartref Properties specialises in managing rental units located within Strata Corporations.
www.cartrefproperties.com
When does a tenancy begin?
Your property is vacant and you search for a new tenant. After multiple viewings and applications you select what you feel is the appropriate tenant for the property. What do you do next? You make arrangements with the tenant when they can move into the property. Let’s say the property is available on the 1st of the next month which is Monday. The property is vacant and the tenants ask if they can move in on the weekend instead of Monday. Since the property is vacant you agree to meet the new tenants on the Thursday evening before the weekend to sign the lease and give them the keys, as this is when both of you are available. The tenants move in on Saturday on the weekend.
The question is when did your new tenancy start? Does it start on the 1st of the month which is the date on the tenancy agreement? Or Saturday the day they moved in?
Both those answers are wrong. The tenancy would begin on Thursday, the day you signed the lease with the tenant. Section 16 of the Residential Tenancy Act states “The rights and obligations of a landlord and tenant under a tenancy agreement take effect from the date the tenancy agreement is entered into, whether or not the tenant ever occupies the rental unit.”
What this means is at the time the lease is signed the tenancy begins, even if tenants fail to occupy the unit. In this scenario if the lease was signed on the Thursday and the tenants did not move in they have engaged the tenancy and have the same rights as a tenant, and you as the landlord have the responsibility as the landlord. How can this affect you as a Landlord?. It is important you ensure your home insurance is active for the Thursday when the lease is signed. This also means the tenant has all the rights of a tenant starting on Thursday. This is a short time frame though I have seen other times when it has been a longer time frame and or when the unit is still occupied by the previous tenant. If a new lease is signed while the previous tenant is still in the unit, you are making assumptions that a tenant will be leaving the property as agreed upon. This could create a situation where two parties are claiming tenants rights to the same property.
Need assistance managing your rental property? contact us for an evaluation of your needs.
Cartref Properties specialises in managing rental units located within Strata Corporations.
www.cartrefproperties.com
What a Landlord needs to know when serving a Two Month notice for landlord use.
The Residential Tenancy Act allows for an individual owner to re-occupy a property they own which currently is a rental. The Residential Tenancy Act states: “A landlord who is an individual may end a tenancy in respect of a rental unit if the landlord or a close family member of the landlord intends in good faith to occupy the rental unit.”
When choosing to evict a tenant with a two month notice (RTB-32) for Landlord use, a Landlord needs to clearly understand the consequences if the landlord fails to follow through with the requirements.
The Tenancy Act requires landlords act in good faith when dealing with tenants. When serving a two month notice a Landlord must provide the notice within the service requirements of the act. The notice specifies that the tenant is entitled to one month free rent when a two month notice is served. This is often taken in the form of the last or second month of rent being waived. The intention of this is to provide the tenant with the resources to rent a new property.
The act also specifies who is required to move in when evicting a tenant for Landlord use. The person moving in must be the owner or a close family member of the owner. Who qualifies as a close family member? The act defines the following parties as close family members:. The individual's parent, spouse or child, or the parent or child of the individual's spouse.
When we look at this definition we also need to understand who doesn’t qualify in accordance with the act. The following people don’t qualify: Landlords, siblings (brothers/sisters), cousins, and friends. Landlords evicting a tenant must clearly understand who qualifies to occupy the property after evicting a tenant for Landlord use. When moving into the property the act requires the landlord to occupy the unit for a minimum of six months.
In 2017 and again in 2021 the Provincial government changed the laws regarding Landlord use with regards to the compensation to tenants for landlord use evictions. What changed in 2017 is when the landlord is found to have evicted a tenant for landlord use and not done so in good faith, the compensation that could be awarded to a tenant is equivalent to one year of the rent they were paying. In 2021 the government changed the onus to the owner to prove they have acted in good faith. Before these changes the tenant would need to prove the landlord hadn’t acted in good faith which can be very difficult.
Why were these changes made? The government makes changes to the Tenancy Act when “some” landlords try to find ways around the system. Evicting a tenant for landlord use then turning around and rerenting the unit allows landlords to raise the rent beyond the legal allowable limit defined by the government each year. Changing the law to increase the compensation for tenants is intended to encourage landlords to follow the rules of the Residential Tenancy Act. One other factor often missed understood and can affect these situations is the Limitation Act in BC. Section 96 of the Tenancy act provides a tenant two years to start a claim for a loss they may have incurred. What this means is if the tenant finds out a year and a half later, the person who moved in failed to meet the qualifications of the Act, a Landlord could still be held responsible for compensation to the past tenant.
Need assistance managing your rental property? contact us for an evaluation of your needs.
Cartref Properties specialises in managing rental units located within Strata Corporations.
www.cartrefproperties.com