BC’s government continues to take action to combat the housing crisis and impose laws to ensure transparency in the real estate market. Enter the Condo and Strata Assignment Integrity Register (CSAIR), managed by the Land Title and Survey Authority of British Columbia. This register will help the government track those who are not paying appropriate taxes by collecting information on assignment sales. Assignment sales are essentially pre-completion condo sales that many investors use to take advantage of price increases in a growing market. This registry is a concrete move towards removing potentially advantageous loopholes from the real estate system. Carole James, BC minister of Finance states “We will not allow real estate speculators and tax frauds to take advantage of loopholes in the system any longer, and this register sends a clear message”. The registry will begin in the New Year. As of January 1, 2019 developers who sell lots in development properties will be required to report information regarding the buyers to this online register. The registry information will be shared with the Canada Revenue Agency to trace property transfers to the assigners income tax to ensure they are paying the right taxes on the property.
What are the requirements of the CSAIR?
With the implementation of this law, developers will be required to;
- include certain prescribed terms and notices in their purchase agreements and their disclosure statements, in order to inform buyers of information collection and reporting requirements (which are triggered by an assignment of a purchase agreement);
- collect certain prescribed information from assignors and assignees of purchase agreements;
- on a quarterly basis, report the prescribed information to the Condo and Strata Assignment Integrity Register, a database for tracking assignments of purchase agreements for presale strata lots, administered by the Land Title and Survey Authority of British Columbia through an online platform; and
- collect and retain assignment agreements for a prescribed period of time.
This will effect developers who have not yet transferred the title to all lots on their development, even those who have sold in pre sale will be required to update their property disclosure statements. Developers should be aware that the amendments define “assignment” very broadly to effectively mean any change in who the purchaser is, even if it just to the purchaser’s spouse.
These restrictions, while onerous will have little effect on those involved in assignments who are adhering to Canadian tax procedures. The paperwork may be slightly more tedious however and for investors looking for market loopholes, this act will make it difficult for them to capitalize on tax evasion previously possible through assignment sales.
Assignments are still a great way to invest in real estate and also a great way to gain access to brand new buildings in great locations that were previously sold out. For more on assignment sales, read this assignment blog post or contact Leo Wilk to view current assignment sales in Vancouver.