OWNING IN BC

Speculation and vacancy tax in Kelowna, and who actually pays it

Kelowna, West Kelowna, Lake Country and Peachland are all inside BC’s speculation and vacancy tax area. For 2026 the tax is 1% of a home’s assessed value a year for Canadian owners and 3% for foreign owners, unless an exemption applies. If you’re a Canadian citizen or permanent resident who lives here and files taxes as a BC resident, the home you live in is exempt, but every owner still has to declare by March 31.

The people it really lands on are second-home owners, and in the Okanagan a lot of those are from Alberta. The rate for Canadians doubled this year, so here’s how it works, as of September 2026.

Where it applies

The province lists every municipality in the tax area. Every place I work is on it: the City of Kelowna, the City of West Kelowna, the District of Lake Country and the District of Peachland. So are Penticton, Summerland, Vernon, Kamloops and Salmon Arm, among others.

Reserve lands and treaty lands are not part of the taxable area. That matters in West Kelowna, where a lot of homes sit on leased First Nation land. My West Kelowna guide covers what leasehold means for a purchase.

The rates

The tax is a percentage of your property’s assessed value, the BC Assessment number, not the price you paid. As of September 2026:

• 2019 to 2025: 0.5% for Canadian citizens and permanent residents, 2% for foreign owners and untaxed worldwide earners
• 2026: 1% for Canadian citizens and permanent residents, 3% for foreign owners and untaxed worldwide earners
• From 2027: 1% for Canadian citizens and permanent residents, 4% for foreign owners and untaxed worldwide earners

“Untaxed worldwide earner” is the province’s term for a category of owner that includes members of what are often called satellite families.

Here’s what that means for a second home assessed at $1,200,000 with no exemption. For 2025 a Canadian owner owed $6,000. For 2026 it’s $12,000. A foreign owner owes $36,000 for 2026, and 4% from 2027 would be $48,000.

The tax is based on who owns the property on December 31, and a year’s tax is due the following July.

Who is exempt

Most owners don’t pay because of the principal residence exemption. To use it, you have to be a Canadian citizen or permanent resident, a BC resident for income tax purposes, and not an untaxed worldwide earner. If you have more than one home, you can only claim it on the one you live in for the longest part of the year.

That’s the line that catches the Alberta second home. An Albertan is a Canadian citizen, so the 1% rate applies rather than 3%, but they aren’t a BC resident for income tax. Their Kelowna place isn’t their principal residence for this tax, and without another exemption it pays.

The rental exemption, and why a suite matters

The other big exemption is for homes that are rented. To qualify, the home has to be occupied by tenants for at least six months of the year, in rentals of at least one month each. The six months can be made up of different tenants.

Two details worth knowing:

• Nightly and weekly rentals don’t count. The rental periods have to be at least a month. A home used only as a short-term rental doesn’t meet this exemption.
• Renting one residence on the property can exempt the whole property. The province’s own example is a Victoria homeowner with a vacation house in Kelowna. The house has a basement suite rented to one tenant for six months of the year, and the entire property is exempt.

For Canadian owners, a family member living in the home can also count as a tenant, even without paying rent, as long as they live there with permission and it’s where they live most of each month.

There are also narrower exemptions, including one for a property you’ve just bought or inherited, and for separation, divorce and a recent death. Each has its own conditions.

Declaring, even when you owe nothing

Declaration letters go out from mid-January to mid-February. Every owner on title declares separately by March 31, including spouses who own a home together, even when no tax is owed. If you don’t declare, the province charges the tax at its maximum rate.

If you do owe, payment is due on the first business day of July, and a 10% penalty plus interest applies to anything paid late.

What I’d do

If you’re buying a second home anywhere from Lake Country to Peachland, budget 1% of the assessed value every year unless it’ll be rented for six months or more. On a $1.2 million assessment that’s $12,000 a year, which changes the math on a vacation property. Look at the assessment, not the price, and I’ve written about how the assessment and market value differ.

If you want the property to be exempt, a suite rented to a tenant for six months of the year can do it for the whole home, so it’s worth weighing when you choose the house. That’s the kind of thing I’d rather talk through before you offer than after, and it’s part of how I work with buyers.

General information about BC’s speculation and vacancy tax, current as of September 2026, and not tax or legal advice. Rates, exemptions and taxable areas are set by the province; confirm your own situation with the province or an accountant. Braden Koop Personal Real Estate Corporation operates under RE/MAX Kelowna. Each RE/MAX office is independently owned and operated.