Tax changes for real estate in British Columbia, Canada:
Increase in Property Transfer Tax (Stamp Duty)
The Property Transfer Tax paid when purchasing residential property was increased to 5% (from 3%) on the purchase price for the value above $3,000,000 effective February 21st, 2018 for all properties closing as of that date regardless of the date the contract was written.
The Foreign Buyer Tax has been increased to 20% as of February 21, 2018 and expanded to areas outside of the Greater Vancouver Regional District. Outside of Greater Vancouver which has no transitional rules, the timelines for transitional rules are in the link below. Essentially the increased Foreign Buyer’s Tax is effective on all transactions completing as of February 20, 2018 in Greater Vancouver and in the other areas affected if contracts were dated prior to February 21th, 2018 and complete prior to May 18, 2018 then they would be exempt. Outside those dates, all properties will be subject to the Foreign Buyer Tax of 20% in those areas noted. The new areas for the Foreign Buyer Tax are:
- Metro Vancouver
- The Capital Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
- Fraser Valley Regional District
Speculation Tax
The Speculation Tax after first being announced, has undergone come changes. It is still subject to final legislation to be announced this fall. But essentially it is applied on properties owned by individuals not paying Income Tax in BC and that keep the property vacant.
In 2018 the tax will be 0.5% for all applicable properties in the areas identified below.
In 2019 and subsequent years the tax will be:
- 2% for foreign investors and satellite families
- 1% for Canadian citizens and permanent residents who do not live in British Columbia; and
- 0.5% for British Columbians who are Canadian citizens or permanent residents (and not members of satellite families).
There are exemptions for British Columbian’s primary residences and for qualifying long-term rentals (A long-term rental is a property that is rented out for at least six months out of the calendar year in increments of at least 30 days. In 2018, a long-term rental is a property that is rented out for three months of that year.)
Special Case Exemptions:
- The owner or tenant is undergoing medical care or residing in a hospital, long-term care or a supportive-care facility.
- The owner or tenant is temporarily absent for work purposes.
- The registered owner is deceased, and the estate is in the process of being
British Columbians with vacant second homes will be eligible for a non-refundable tax credit that is immediately applied against the speculation tax. This credit will offset a total of $2,000 in speculation tax payable. This tax credit will ensure that British Columbians do not pay tax on a second home valued up to $400,000
The link below outlines the Speculation Tax and exact locations as referred to below.
https://news.gov.bc.ca/releases/2018FIN0009-000501
- The Capital Regional District (excluding the Gulf Islands and Juan de Fuca)
- Kelowna and West Kelowna
- Nanaimo-Lantzville
- Abbotsford, Chilliwack and Mission
School Tax Increase
Starting in 2019 the provincial government will be raising the amount of school taxes for all properties in the province valued at $3,000,000 and more. Properties valued between $3,000,000 and $4,000,000 will be subject to a 0.2% tax on that value between $3,000,000 and $4,000,000; a 0.4% tax on the assessed value above $4,000,000 beginning next year. For example, a property valued at $3,500,000 will only have the $500,000 value taxed at the extra 0.2% ($1,000). This is an annual tax and is summarized in the link below:
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/understand/school-tax
City of Vancouver Empty Home Tax
The City of Vancouver Empty Home Tax “EHT” became effective January 1, 2017. The Empty Home Tax is applied annually with the first taxation year beginning January 1, 2017. The tax for 2017 is payable by April 2018. The tax rate is 1% of the assessed value based on the assessment in the year the tax is paid.
The EHT does not apply to a home used as a principal residence or is subject to a long term tenancy agreement of at least 180 days accrued in a calendar year with a minimum of 30 day terms for the tenancies.
There are various exemptions for the EHT for situations such as major renovations, major illness, death of the owner, ownership of the property changed curing the previous year, strata rental restrictions that were in place prior to November 16, 2016, homes used for work orders, homes subject to a court order. Explanations for these can be found on the City of Vancouver website http://vancouver.ca/home-property-development/empty-homes-tax.aspx
Every residential home owner in the City of Vancouver must submit an Empty Home Declaration by February each year, whether the property is deemed vacant or not. Failure to do so will result in the City declaring the property vacant.