B.C. Targets Foreign Real Estate Buyers with New Tax
Effective August 2, 2016, an additional 15% property transfer tax applies to residential property transfers to foreign entities in the Greater Vancouver Regional District.
The additional tax applies on all applicable transfers registered with the Land Title Office on or after August 2, 2016, regardless of when the contract of purchase and sale was entered into.
Foreigners who buy residential property in the Vancouver area will have to pay an extra 15-per-cent tax as part of a B.C. government plan to slow the foreign speculation that many blame for making the region’s homes the most unaffordable in Canada.
The change to the province’s property transfer tax announced on Monday means an extra $300,000 in taxes for people from abroad buying a home for $2-million. Detached houses in the area typically run around that or higher. The surprise move comes after the government tracked all residential real estate transactions across British Columbia over four weeks in June and July and found foreign citizens who were not permanent residents bought just more than a billion dollars worth of property.
British Columbia’s current transfer tax is a 1-per-cent levy on the first $200,000 of a home’s sale price and another 2 per cent on the rest of the price up to $2-million. That system was instituted in 1987, when homes were much cheaper. Earlier this year, 3 per cent was added for the portion of the price above $2-million.
The additional tax announced on Monday will apply to the sale of all residential properties within 22 communities in Metro Vancouver, and will apply to buyers who are not Canadian citizens or permanent residents and corporations that are either not registered in Canada or are controlled by foreigners. These foreign buyers must indicate their citizenship in the paperwork when transferring title.
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