Budget 2018: Measures Affecting Real Estate
In its 2018 Budget, the provincial government announced a number of measures that will impact the real estate industry. Among the measures announced on February 20, 2018:
Changes to the Property Transfer Tax rate: the tax rate on residential properties above $3 million has increased from 3% to 5%, effective February 21, 2018.
Increase and Expansion of Additional Property Transfer Tax: also known as the foreign buyer tax, this tax applies to properties purchased by foreign nationals. Properties registered on or after February 21, 2018 are taxable at 20% of the fair market value, in the following areas:
- Capital Region District
- Fraser Valley Regional District
- Greater Vancouver Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
Transitional rules apply to property transfers subject to written agreements dated on or before February 20, 2018 in the Capital, Fraser Valley, Central Okanagan and Nanaimo regional districts. Additional property transfer tax may not be required until May 18, 2018. For full information on the transitional rules see Additional Property Transfer Tax for Foreign Entities & Taxable Trustees.
Licensees should advise clients whose transactions may be affected by the changes to the Property Transfer Tax to seek independent professional advice.
Further Initiatives Planned for 2018
The Government also announced its intention to introduce initiatives to increase transparency in real estate markets, including:
Speculation Tax: an annual tax on residential properties applied to property owners who do not pay income taxes in BC.
Database of Pre-Sale Condo Assignments: accessible by federal and provincial tax authorities, the database will collect and report information on pre-sale condominium assignment.
Beneficial Ownership Registry: a public registry to provide transparency on the true owners of properties.
Information on these and other budget measures is available in the government’s Budget Highlights.