As the budget was announced, we have learned that we will see more taxes in many areas of Real Estate. For some reason, the government believes that to solve any Real Estate crisis the only solution is taxing the ones who have more money. Unfortunately, we have seen that just does not work in the long run. They are still not helping the people trying to get into the market at the end of the day and those are the ones who need it the most.
I am strictly focused on Vancouver Real Estate of course and here are the latest updates for us:
Update as of February 21, 2018:
ADDITIONAL PROPERTY TAX FOR FOREIGN ENTITIES AND TAXABLE TRUSTEES
– Has gone from 15% to 20%, effective today.
– Contracts written before Feb. 20, 2018, with a closing on or before May 2018 are exempted, but only for Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan or Nanaimo Regional District. Note this exemption does not apply in Greater Vancouver.
– Transfers pursuant to court order, order nisi of foreclosure, separation agreement, transfer from a personal representative of deceased’s estate to a beneficiary or transfer to surviving joint tenant are also exempt, provided the triggering event occurred before Feb. 20, 2018.
– This tax applies to the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, Nanaimo Regional District and Greater Vancouver. The areas for each region can be found at https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/additional-property-transfer-tax/bc-areas
– Only on residential property; if the property is farmland or commercial with a residential component, tax applies on the residential component.
– Exemption for BC Provincial Nominee Program still applies.
VANCOUVER REAL ESTATE SPECULATION TAX
– This tax is meant to target foreign and domestic homeowners who do not pay income tax in B.C.
– Tax will apply to same areas as foreign buyers tax apart from Okanagan, where it only applies to Kelowna and West Kelowna.
– It will start in 2018 at $5.00 per $1,000.00 of assessed value, goes up to $20 in 2019
– Currently unsure of how this will affect vacation homes, nor when this tax is payable.
PROPERTY TRANSFER TAX (PTT)
– PTT Tax will rise from 3% to 5% on value of homes over $3,000,000.00.
– Remains at 1% on first $200,000.00, 2% on amounts between $200,000.00 and $2,000,000; 3% on amounts between $2,000,000.00 and $3,000,000.00 and 5% on amounts over $3,000,000.00.
PRE-SALE CONDO ASSIGNMENTS
– Developers will collect and report information about pre-sale condo purchases; nothing else in the budget about pre-sale contracts or assignments that we have seen.
Update as of February 20, 2018:
While we are still trying to work out the details, here is what we know of today’s provincial budget as it relates to real estate.
The foreign buyer’s tax goes to 20%, effective tomorrow, and is now applicable in Capital Regional District, Fraser Valley, Central Okanagan and Nanaimo Regional District. No doubt many deals will close today to avoid this extra tax.
Property transfer tax will go from 3% to 5% on values of homes over $3,000,000.00. It is currently 2%.
A speculation tax will be introduced on homes owned by people who do not pay taxes in B.C. and will be payable on homes in the same areas as the foreign buyer’s tax.
I have always said government intervention never helps. They also always seem to time these “foreign taxes” in times where some markets were already showings signs of balancing so they introduce these taxes and act as though they have saved the day.
My feeling is they really do not have anyone with their feet on the ground when it comes to these issues and that could really help.
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