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BC Foreign Buyers Tax – Additional Property Transfer Tax and Exemptions

What is the BC Foreign Buyers Tax?

The BC Foreign Buyers Tax is a 20% tax added to the Property Transfer Tax when a foreign citizen or non-permanent resident of Canada purchases a residential property in Metro Vancouver.

History of the BC Foreign Buyers Tax

This tax was added as a part of Bill 28, the Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016. The law was introduced after public pressure urged the British Columbia provincial government to intervene in the housing market. 

Foreign investments, mainly from China, were speculated to be a major contributor to the rapid rise in home prices. Thus, the additional tax to foreign investors was imposed to try and reverse the housing crisis in Vancouver.

Bill 28 came into full effect on August 2, 2016. The provincial government passed the law imposing a 15% foreign buyers tax as an additional property transfer tax along with three other key factors of the bill.

In 2018, the tax increased to 20% and extended to the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts.

Four Parts to Bill 28
  1. Vacancy Tax – “Amendments to the Vancouver Charter to enable the City of Vancouver to impose a municipal vacancy tax on vacant residential property”
  2. Foreign Buyers Tax“Amendments to the Property Transfer Tax Act, imposing an additional property transfer tax of 15% on all residential property purchased by foreign buyers”
  3. Discontinuing industry self-regulation – “Amendments to the Real Estate Services Act discontinuing industry self-regulation of the real estate industry”
  4. New Housing Priority Initiatives – “Creating a new Housing Priority Initiatives special account to fund initiatives in respect to housing, rental, access, and support programs with the new tax revenues resulting from this law”
Who does the BC Foreign Buyers Tax apply to?

The BC Foreign Buyers Tax applies to you if you’re a foreign national, foreign corporation or taxable trustee.

You must pay the additional property transfer tax on your share of a residential property transfer if the property is within the following areas of BC:

However, the tax doesn’t apply to properties located on Tsawwassen First Nation lands.

How much is the BC Foreign Buyers Tax?

The current tax rate is a 20% addition to the property transfer tax. 

If the property transfer is registered on or before February 20, 2018, the tax amount is 15% of the fair market value of your proportionate share.

If the property transfer is registered on or after February 21, 2018, the tax amount is 20% of the fair market value of your proportionate share.

Your proportionate share is the percentage of interest that you’re registering on title with the Land Title Office. For example, if you’re a foreign entity acquiring a 70% interest in a property, you pay the tax on 70% acquired interest.

Exemptions to the BC Foreign Buyers Tax

The three main exemption categories of the tax are:

  • Principal Resident of a Residential Property
  • BC Provincial Nominee program
  • Canadian-controlled Limited Partnerships
Principal Resident of a Residential Property

If you’re exempt from property transfer tax, you’re probably also exempt from the foreign buyers tax. This means if you own a residential property and use it as a principal residence, you are exempt.

The exemption doesn’t apply to the additional property transfer tax in the following situations:

  • A transfer resulting from an amalgamation
  • A transfer to a surviving joint tenant
  • A transfer where the transferee is or becomes a trustee in relation to the property, even if the trust does not change
B.C. Provincial Nominees

If you’re a foreign national who receives confirmation under the B.C. Provincial Nominee Program and you claim the exemption, then you do not pay the tax.

To qualify for this exemption you must:

  • Be a confirmed B.C. Provincial Nominee when the property transfer is registered with the Land Title Office
  • Use the property as your principal residence
  • Make the property transfer to an individual

This exemption only counts one time. Each new property purchased after will be subject to the foreign buyers tax.

Canadian-controlled Limited Partnerships

If you’re a general partner who’s a Canadian citizen or permanent resident and you’re purchasing a property on behalf of a qualifying Canadian-controlled limited partnership, you may be exempt from paying the foreign buyers tax.

To qualify for this exemption, the property (land and improvement) transfer must be registered at the Land Title Office on or after June 1, 2020 and: 

  • Each general partner must be a Canadian citizen, a permanent resident of Canada or a corporation that’s not a foreign corporation
  • Each general partner and each limited partner must be a resident of Canada for income tax purposes throughout the taxation year in which the transfer occurs
  • The combined interest of all foreign limited partners in the limited partnership must account for less than half of the entitlement of all partners to share in the profits of the limited partnership
Refund for BC Foreign Buyers Tax

You may also be eligible for a refund on the tax if you became a permanent resident or Canadian citizen within one year of the date the property transfer was registered with the Land Title Office.

How to claim an exemption on the BC Foreign Buyers Tax

Please refer to the Government of BC website for more information on claiming an exemption. Details of the BC Foreign Buyers Tax also known as the Additional Property Transfer Tax are in full there. The details may be subject to change so please check the official site for the latest updates.

And if you are looking to sell your home, check out our other blog for information for foreign sellers.

For more information on real estate market in Vancouver, current trends, buying a home or selling a home, contact Leo Wilk – Your Top Vancouver Realtor

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