With the ever-increasing prices of real estate over the recent years, the lack of affordable housing in Vancouver and its surrounding areas has become a prominent issue for many residents of BC. The BC government has long recognized that non-Canadian real estate investors were among the biggest contributors to the hikes in real estate. The provincial government’s first attempt to address the issue took the form of the implementation of the “Luxury Home Tax”, whereby a higher rate of property transfer tax would be payable for properties priced at $2 million dollars or more. Click here to read our previous blog post on this topic (insert link).
On July 25, 2016, the provincial government announced the introduction of an additional property transfer tax that will be applicable to residential property transfers to foreign entities. Effective August 2, 2016, foreign entities acquiring an interest in residential properties located in the Greater Vancouver Regional District will be required to pay an additional property transfer tax in an amount equal to 15% of the purchase price. The Greater Vancouver Regional District has been defined to include the following cities: 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. Properties located on Tsawwassen First Nation lands will not be subject to the additional tax.
The following are examples of entities that would be considered “foreign” in accordance with this new rule:
i) individuals who are non-residents of Canada (not Canadian citizens or permanent residents);
ii) corporations not incorporated in Canada; and
iii) corporations incorporated in Canada, but controlled in whole or in part by a non-resident of Canada (unless it is a public company).
It is also important to note that the additional tax will be payable:
i) in addition to the standard property transfer tax;
ii) together with the standard property transfer tax (when the property transfer is registered at the Land Title Office);
iii) regardless of when the Contract of Purchase and Sale was entered into; and
iv) regardless if the transaction would normally qualify for an exemption from property transfer tax.
For more information on the application of the additional property transfer tax, visit the Government of BC.
If you are buying a property and are unsure as to whether you will be subject to pay the additional property transfer tax, please contact our office to speak to a lawyer. Our real estate lawyers will be happy to answer any questions you may have about your upcoming property purchase.