New Property Transfer Tax – B.C.’s Real Estate MarketPublished: July 28, 2016
As of August 2, 2016, any home purchased in Metro Vancouver by a foreign buyer will be subject to the Property Transfer Tax (PTT), a new 15% tax by the B.C. government. The tax legislation is part of the B.C. government’s efforts to relieve pressure on Metro Vancouver’s overheated residential real estate market, and address low vacancy rates and high real estate prices.
It’s interesting – and we think it’s a bold move. It wasn’t overly clear to us what the provincial government plans to do with the windfall of unplanned tax money from this PTT? And, if this bonus PTT will actually stabilize home prices for level entry buyers, or slow foreign investors? Or course, this new PTT legislation could just be one part of a bigger plan. Time will tell. We do welcome foreign investors here in the Okanagan/Shuswap, especially in our recreational real estate markets. Hopefully this new PTT won’t be expanded into our regions.
In the interim, we are hearing of the mad scramble as lawyers, foreign buyers and Realtors do what they can to close deals and help buyers avoid being hit by thousands of dollars in unexpected tax. The best advice from Tony Spagnuolo, Barrister & Solicitor with Spagnuolo & Company Lawyers is, “If you have a file closing over the next week or two you should try to move it up to this week.” An interesting challenge as we approach the long weekend!
Here in the Okanagan the market is rolling. Even before this announcement we were hearing from overloaded home inspectors and getting calls from swamped lawyers around the Okanagan-Shuswap, warning us they are working at capacity… We live in exciting times!
Here is what we know about the new PTT, courtesy of Spagnuolo & Company Lawyers*:
- A foreign national is one who is not a Canadian citizen or permanent resident. If it is company that is purchasing, a foreign company is one that is not incorporated in Canada, or incorporated in Canada but controlled in whole or in part by a foreign national or other foreign corporation;
- The increased tax only applies to properties in the Greater Vancouver Regional District, and does not apply elsewhere in the Province, or the Tsawwassen First Nations Lands;
- The tax only applies to residential properties, not commercial;
- This is in addition to the regular PTT to be paid, and is paid on closing;
- The increased tax is effective August 2, 2016, regardless of when the contract is signed. Even if the contract was signed weeks ago, if it completes after August 2, 2016 there is a higher tax;
- We need to confirm the clients SIN number and compare it to an official government document, such as a passport or SIN card. Prepare your clients to have such ID;
- The additional tax is payable even if there would normally be an exemption available. Transfers between related individuals, transmission to surviving joint tenant and other such items now attract the additional tax.
* PTT information provided courtesy of :
Tony Spagnuolo, Barrister & Solicitor
Spagnuolo & Company Lawyers
#300-906 Roderick Avenue
Coquitlam, BC V3K 1R1