I hope you will find this Legal Update by Mullin DeMeo Barristers and Solicitors interesting and helpful.
The British Columbia government made several announcements regarding housing as part of the NDP 2018 Budget. Among those announcements are the following:
1. Additional Property Transfer Tax (Foreign Buyer Tax):
a. Increase of the Additional Property Transfer Tax on Foreign Entities from 15% to 20%.
b. Expanded regions of the Province where the Additional Property Transfer will apply, to include the Capital Regional District, the Fraser Valley, the Central Okanagan, and the Nanaimo Regional District.
i. Grandfathering provisions will exempt transactions from the Additional Property Transfer Tax in the above areas if registration occurs before or on May 18, 2018 and the property transfer is subject to a written agreement dated on or before February 20, 2018 (a definition of written agreement has not been provided).
c. Further information on the Additional Property Transfer Tax and other exemptions to the Additional Property Transfer Tax can be found in the following link: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/additional-property-transfer-tax
2. Property Transfer Tax:
a. The Property Transfer Tax has been increased for residential properties on the portion of the Fair Market Value of the property in excess of $3,000,000.
b. The Property Transfer Tax rate now is:
i. 1% on the first $200,000,
ii. 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
iii. 3% on the portion of the fair market value greater than $2,000,000, and
iv. if the property is residential, 5% on the portion of the fair market value greater than $3,000,000.
c. This is effective February 21, 2018 and there is no exemption for contracts of purchase and sale entered into prior to February 21, 2018 closing on or after February 21, 2018.
d. Further information on the Property Transfer Tax can be found in the following link: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand#FairMarket
3. Speculation Tax:
a. Beginning fall 2018, the Province has announced that it will introduce a new speculation tax on residential property targeting foreign and domestic owners who own real estate in BC but do not pay taxes in BC.
b. While full details of this tax have not been released, the Province has announced:
i. The new tax will apply to the Metro Vancouver, Fraser Valley, Capital Regional District, Nanaimo Regional District and the municipalities of Kelowna and West Kelowna.
ii. Exemptions will be available for most principal residences, qualifying long term rental properties and special cases.
iii. The tax rate will be 0.5% of the taxable assessed value of the property for 2018 and 2% for 2019.
c. Further information on this proposed speculation tax can be found on page 10 in THIS LINK
4. General Anti-Avoidance Rules
a. The Property Transfer Tax Act is subject to general anti-avoidance rules and applicable penalties.
Professional advisors (including Realtors) advising someone to avoid, evade or attempt to avoid or evade tax liability under the Property Transfer Tax Act may result in significant penalties including double the tax, tax plus interest, a fine of $200,000 for corporations or $100,000 for individuals and/or up to two years in prison.
b. Further information on this can be found in the following link: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/file
This is only a brief discussion of some aspects of certain announcements related to housing in the 2018 Budget. The following is a link to further information on the NDP housing announcements: http://bcbudget.gov.bc.ca/2018/homesbc/2018_Homes_For_BC.pdf. If you have any questions on the above or any other real estate related matter, please do not hesitate to contact our office at any time.
Contributed by Mullin DeMeo