Practice / Industry Group: Real Estate
On February 20, 2018, the Hon. Carole James, Minister of Finance and Deputy Premier, introduced the 2018 British Columbia Provincial Budget. Included in the Budget was the NDP’s 30-point plan for housing affordability in British Columbia.
Included in this 30-point plan are the following measures:
1. New Speculation Tax. In Fall of 2018, the Province will introduce a new speculation tax on residential property. The tax will target foreign and domestic speculators who pay little or no income tax in British Columbia. Primary residences and long term rentals will generally be exempted. The tax will apply to the Metro Vancouver, Fraser Valley, Nanaimo and Capital Regional Districts, and Kelowna and West Kelowna. The tax rate will be 0.5% of taxable assessed value for the 2018 tax year and 2% thereafter.
2. Property Transfer Tax Increase on Residential. Effective February 21, 2018, Property Transfer Tax on residential properties has been increased from 3% to 5% on the portion of the fair market value greater than $3,000,000.
3. Foreign Buyers’ Tax Increase. Effective February 21, 2018, the foreign buyers’ tax (also known as the additional property transfer tax) has been increased from 15% to 20%. This tax has also been extended outside of the Lower Mainland to include the Capital Regional District, the Fraser Valley, the Central Okanagan and the Nanaimo Regional District (though there will be a short grandfathering period for transactions in these regions).
4. Pre-Sale Assignment Registry. The Province will require developers to collect and report comprehensive information about the assignment of pre-sale contracts. The government also indicated that collecting this information will allow government to develop new taxation models in the future.
5. Beneficial Ownership Registry. In addition to requiring further beneficial ownership information to be disclosed on Property Transfer Tax filings, the Province is establishing a public registry recording beneficial ownership of land that will be administered by the Land Title Survey Authority. The Province will also be enacting legislation that will require corporations in British Columbia to hold accurate and up-to-date information on beneficial owners of land in their own records office so as to be available to governmental authorities. Again, the government indicated that the collection of this information will allow the government to develop new taxation models in the future.
We will provide a further update as more details related to these new measures are made public.