B.C.’s New 15{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} Foreign Buyers Tax

  • Vancouver neighbourhood homes

While many cities across the country have experienced some cooling in their housing markets, Metro Vancouver’s market continues to soar.  It seems like every month local home prices hit yet another high.  Many believe Vancouver home prices have become unaffordable to local buyers, largely fuelled by wealthy offshore buyers.  Queue to June 25th when the province announced they were stepping in and introducing legislation to help cool the overheated market.

The controversial new 15{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} foreign buyer tax took effect August 2nd, 2016.  For now, it applies only to foreign individuals or corporations purchasing residential real estate in Metro Vancouver (from Bowen Island to Maple Ridge/Langley Township, excluding Tsawwassen First Nation lands).  The additional tax does not apply to non-residential properties.  As such, for mixed-use developments that have both residential and commercial components, only the portion for residential use is subject to the 15{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} tax.

Lower Mainland Map

Map of Metro Vancouver

Currently, an average single detached home in Metro Vancouver sells for $1.56 million dollar.  Before August 2nd, like Canadians and permanent residents, foreign buyers only had to pay the general Property Transfer Tax (PTT) – 1{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} on the first $200,000 of the property’s value, 2{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} on the portion up to and including $2 million and 3{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} on the remaining value greater than $2 million.  This equates to $29,200 in PTT.  However, under the newly introduced 15{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} tax, foreign buyers will have to pay $234,000 in additional PTT on the same $1.56 million dollar home.

The new tax must be paid with the general Property Transfer Tax at the time the property transfer is registered with the Land Title Office.   Those who fail to pay, or commit offences related to the tax will face penalties.  Fines payable amount to the unpaid tax with interest, plus up to $200,000 for corporations or $100,000 for individuals and/or up to two years in prison.

The government announced that any revenue generated from the tax would go into a special housing fund to be spent on housing affordability projects for renters, low income owners and first time buyers.

Vancouver neighbourhood homes

The benchmark price for a detached Vancouver home increased 38.7{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} to $1.56 million.

While some hail this tax as a step in the right direction, others believe there are other more effective means to tackle the affordability crisis.  They see it as a supply and demand issue.  According to government statistics, there are 40,000 people migrating to this region every year.  Demand is outpacing supply and as a result prices have been pushed up.  By aggressively increasing supply and building up density, people like Jon Stovell from the Urban Development Institute and local Condo King, Bob Rennie, believe it will have a more positive affect on the long term affordability in this region.

To learn more about Bill 28, Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, or how we can help you, your family or your business, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.

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