The BC Budget dated February 20, 2018, had many changes that effected the real estate market.
PROPERTY TRANSFER TAX RATE
Increase to 5% from 3% for residential property over 3 million.
The government will also require additional information about beneficial ownership on the Property Transfer Tax form. The government is taking action to end hidden ownership of property through bare trusts.
FOREIGN BUYER TRANSFER TAX
Increase to 20% from 15%.
The budget also extended the tax to other regions in BC.
The area in which additional property transfer tax applies is expanded to the Capital Regional District, the Regional District on Central Okanagan, the Fraser Valley Regional District and the Regional District of Nanaimo.
Starting in 2018 an annual speculation tax will be imposed on residential property in BC. This new tax will target foreign and domestic home owners who do not pay income tax in BC, including those who leave their homes vacant. Households with high world wide income that pay little income tax in BC will also be liable for the tax.
Initially the tax will apply to the Metro Vancouver, Fraser Valley, Capital and Nanaimo Regional Districts and in the municipalities of Kelowna and West Kelowna. The government has since announced changes to the geographic areas where the tax will apply, removing Parksville, Qualicum, unincorporated Gulf Islands and the Juan de Fuca electoral area.
The tax rate will be $5 per $1,000 of assessed value in 2018 and will rise to $20 per $1,000 of assessed value in 2019. Up-front exemptions will be available for most principal residences and for qualifying long-term rental properties and certain special cases. Persons who do not qualify for an up-front exemption, but who pay income taxes in BC, can claim a new non-refundable income tax credit to offset the tax.
Further information on how to apply for an exemption and income tax credit is forthcoming.