Other (Potentially) Applicable Taxes
GST or 'Goods and Services Tax' is a 5% Federal Tax that is payable on the sale of brand new or substantially renovated properties in BC*. Substantially renovated typically refers to buildings that have undergone signiifcant alterations excepting the original foundation, external walls, interior supporting walls, floor, roof and staircase. Newly constructed properties include presale condo sold by developers, or owner-built homes. It also includes the assignment of contract purchased from another investor. GST is due at the time of completion and is approximately 5% of the purchase price, subject to any rebates. As of 2022, GST is also payable by the assignor on the "lift" or profit received through the sale of an assignment.
Whether or not GST is payable not always immediately clear so care should be taken and it best to speak with a qualified tax accountant. GST can also apply to sales of vacant land used for business purposes or resulting from sub-division.
There is a New Home Rebate which amounts to a 36% reduction in the GST that is payable for homes under $350,000, so long as the buyer intends on living there an his/her permanent residence. Property purchases between $350,000 and $450,000 qualify for partial rebates and those over $450,000 receive no GST at all.
Purchasers who plan on renting out the new home may also be eligible for a GST New Residential Rental Rebate.
Similar to the GST New Housing Rebate, only new homes priced to a maximum of $350,000 qualify to receive the full GST NRR Rebate. A partial GST NRR Rebate is available for properties priced between $350,000 and $450,000.
*Realtor and contractor fees are also subject to GST. These are typically paid by the seller but if a buyer has retained a buyer's agent working under a fee agreement", it may apply.
Speculation & Vacancy Tax
This tax applies to BC property owners in certain areas who are not living in one or more homes that they own, nor renting them out. For those that do choose to rent them, they can qualify for an exemption should them rent the home for at least 6 months of the year and in minimum 1 month increments. Other exemptions can apply and you can see a complete list here. Different criteria apply to Land Under Development, as well as for Business Partners, Corporations and Trustees.
Starting in 2019, the speculation and vacancy tax rate became dependant on your residency and where you file and pay income tax:
2% for foreign owners and satellite families
0.5% for British Columbians, and other Canadian citizens or permanent residents, who are not members of a satellite family
It applies to homes in these areas.
Vancouver Empty Homes Tax:
Similar to the Speculation & Vacancy Tax in idea, but a completely separate tax in its own right, the Vancouver Empty Homes Tax only applies to Class 1 Residential homes, as you would guess, in Vancouver. Vacant homes will be subject to a tax of 1.25% of the property’s assessed taxable value for 2020, and this rate will increase from1.25% to 3% for 2021.
Like the Speculation & Vacancy Tax, homes that are rented for at least half of the year for a minimum of 1 month at a time are exempt.
For more on the Vancouver Empty Homes Tax go here.
Annual Property Taxes:
BC property owners generally have until the early July deadline to pay their taxes (or defer payment). Therefore, depending on whether the previous owner of the property you are buying pre-paid their taxes, you could be on the hook to repay them for the potion of the year you will own the property. Likewise, if they haven't paid their taxes, they will be reimbursing you for the months the property did not belong to you. All of this is figured out at completion by the lawyer or notary that has been hired to oversee transfer of the funds and any adjustments.
Foreign Buyers Tax:
The Foreign Buyers Property Transfer Tax is an additional 20% tax that foreign entities or taxable trustees pay on top of the standard property transfer tax. It applies to all residential property located in the Greater Vancouver Regional District (GVRD) (also known as the Metro Vancouver Regional District). As of February 21st, 2018, the taxation zone has also been expanded to include the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts.
The GVRD includes Anmore, Belcarra, Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lion’s Bay, Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock and Electoral Area A.
The BC Government defines a "foreign entity' and "foreign corporation" as:
"A foreign entity is a property purchaser or transferee that is a foreign national or a foreign corporation.
A foreign national is a person who is not a Canadian citizen or permanent resident of Canada, including a stateless person.
"A foreign corporation is a corporation that is one of the following:
Not incorporated in Canada
Is incorporated in Canada but is controlled in whole or in part by a foreign national or other foreign corporation, unless the shares of the corporation are listed on a Canadian stock exchange
Is controlled directly or indirectly by a foreign entity (see section 256 of the Income Tax Act (Canada) for further details)
A taxable trustee is a trustee that is a foreign national or foreign corporation holding title in trust for beneficiaries. The taxable trustee can also be a Canadian citizen holding title in trust for beneficiaries who are foreign nationals or foreign corporations."
The above information is to be used for general guidance purposes. Please speak with a qualified accountant for detailed advice regarding your specific situation.
*** For information about the BC Property Transfer Tax go here.