Photo: Chad Chipolito / The Canadian Press
The provincial budget was released yesterday and, unsurprisingly, housing-related issues were a major focus.
By ‘major’, I mean the government included a 30-point housing strategy that’s intended to reduce housing demand, increase affordable housing, mitigate tax fraud and strengthen security for renters.
Here are some of the new rules and regulations which you will likely come to either love or hate:
Expanded Foreign Buyer Tax
• Effective today, February 21, 2018, the Foreign Buyer Tax will increase from 15% to 20%.
• The area that the property transfer tax now applies to has been extended to include the Fraser Valley, Nanaimo, Capital and Central Okanagan Regional Districts.
• If the property is located in the above areas and you are in the middle of a transaction, there are transitional rules available. For example, you don’t have to pay the additional property transfer tax if the registration occurs before or on May 18, 2018 and the property transfer is subject to a written agreement dated on or before February 20, 2018.
Modified Property Transfer Tax
Effective February 21, 2018, the Property Transfer Tax on residential properties above $3 million will be raised from 3% to 5%. It otherwise remains at 1% for the first $200,000, 2% of everything else up to the $2,000,000 mark, and 3% for the amount between $2 million and $3million unless exemptions apply.
New Speculation Tax
• A new speculation tax on residential properties will target foreign and domestic homeowners who don’t pay income tax in BC. This applies whether if the home is vacant or does not qualify as a long-term rental. Details haven't been released as to what qualifies as a "long-term rental".
• The tax will apply to the Metro Vancouver, Fraser Valley, Capital, and Nanaimo Regional districts and in the municipalities of Kelowna and West Kelowna.
• In 2018, the tax rate will be $5 per $1,000 of assessed value. In 2019, the tax rate will rise to $20 per $1,000 of assessed value.
• The province will attempt to enforce this tax by collecting information including: social insurance numbers, household details, and global income amounts.
• A non-refundable income tax credit will help offset the tax for BC residents.
Increased Provincial School Tax
The provincial school tax will be increased for most residential property owners whose homes are valued above $3 million. This change will take effect in 2019.
Affordable housing
• The province has allotted $6 billion towards affordable housing to create 114,000 homes over the next 10 years.
• The province has pledged to enhance local government capacity to build and retain affordable housing.
• The province will now require developers to provide comprehensive information about the assignment of pre-sale condo purchases.
• The province will track ownership information.
• The province will collect additional information in an attempt to strengthen regulatory enforcement in real estate.
Affordable Housing
• The province has allotted $6 billion towards affordable housing to create 114,000 homes over the next 10 years.
• The province has pledged to enhance local government capacity to build and retain affordable housing.
• The province will now require developers to provide comprehensive information about the assignment of pre-sale condo purchases.
• The province will track ownership information.
• The province will collect additional information in an attempt to strengthen regulatory enforcement in real estate.
Database of Pre-sale Condo Assignments
The province will now require developers to collect and provide comprehensive information about the assignment of pre-sale condo purchases. The information gathered will be shared with federal and provincial tax authorities to ensure taxes are paid.
Property Tax Review for ALR land
The province is looking into residential properties in the ALR to ensure that the majority of the land is being used as it was intended to be - for farming. This effort is part of the Agricultural Land Reserve (ALR) review.
Online Accommodation PST and MRDT
Online accommodation platforms will facilitate the collection and remittance of the Provincial Sales Tax and Municipal and Regional District Tax (Hotel Room Tax).
Access to MLS®
This is a little bit unclear, but it sounds like province is planning give tax administrators access to information held in an MLS® database for the purpose of overseeing property transfers.
Beneficial Land Ownership registry
Additional information regarding beneficial ownership is now required on the PTT form.
Administered by the LTSA, this publicly-available information will be shared with federal and provincial tax and law enforcement authorities. Legislation will be introduced to require BC corporations to maintain accurate information on beneficial owners and make these records available to law enforcement and tax authorities.
Task force on Money Laundering & Tax Evasion
The province is cooperating with the federal government to create a formalized, multi-agency workgroup that will oversee tax evasion, money laundering and housing-related issues.
Residential Tenancy Branch
The province will increase funding for the Residential Tenancy Branch to reduce wait times and dispute resolutions. The money is also intended to improve service and the amount of resources dedicated to strengthening the Residential Tenancy Act and the penalties for those who repeatedly break the law.
The Response
Jill Oudil, of the Real Estate Board of Greater Vancouver had this reponse:
“We welcome the provincial government’s commitment to address money laundering concerns and increase the supply of affordable, social, and rental housing in our province. We’re concerned, however, about the series of tax measures announced today."
Have questions about how the new taxes and increases could impact you? Get in touch.