What You Need to Know About New Taxes on Real Estate

The BC Government released their 2018 budget in February which includes new housing taxes, and some changes to current taxes.

The Fraser Valley Real Estate Board (FVREB) itemized some of the changes, which I have further summarized for you below:

Property Transfer Tax (PTT)

  • The PTT is now increased to 5% from 3% on the portion of a property’s fair market value above $3 million. Homes over $3 million will also see increases in BC school tax.
  • The Foreign Buyers’ Tax is increased to 20% from 15%, and now includes the Fraser Valley.
  • BC will require additional information about beneficial ownership on a new Property Transfer Tax Return form (Version 30) downloadable from the Land Title & Survey Authority of BC

Your questions about the PTT can be answered HERE.

Speculation Tax

Those who own residential properties in BC but do not pay income tax, and those with homes sitting vacant will be targeted with a new annual “speculation” tax:

  • The tax will be effective for the 2018 tax year and up-front exemptions will be available for qualifying long-term rental properties and certain special cases.
  • A non-refundable income tax credit will be introduced to offset the new tax to provide relief for those who do not qualify for an up-front exemption but who pay tax in BC.
  • This new tax will initially 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, increasing to $20 per $1,000 of assessed value in 2019.
  • The tax will be administered by the province and will collect data including, social insurance numbers, household information and world-wide income information.
  • Any information collected will also be shared with the Canada Revenue Agency.

Additional Taxes

Online Accommodation PST and MRDT:

  • Online accommodation platforms (such as AirBnB) are enabled to collect and remit the Provincial Sales Tax and Municipal & Regional District Tax.

Property Tax Treatment for ALR land:

  • The Province is planning to review property tax treatment of residential property in the ALR as part of a broader review to ensure ALR land is being used for farming.

Taxes on pre-sold condos

Developers will be required to collect and report comprehensive information about the assignment of pre-sale condo purchases. The information will be reported to a designated government office and shared with federal and provincial tax authorities to ensure taxes are paid.

Clearing Up Property Ownership

The government plan is that tax administrators will be able to compel access to information in the MLS database relevant to property transfers. The BC Real Estate Association BCREA will be investigating which information the government will be able to compel.

The Province is creating a publicly accessible land ownership registry which will also be available to federal and provincial tax and law enforcement authorities.

Legislation will be introduced to require BC corporations to hold accurate and up-to-date information on beneficial owners in their own record offices available to law enforcement, tax and other authorities.

The new tax measures come into effect on February 21, 2018. The changes to the Property Transfer Tax (PTT) and the Foreign Buyers’ tax will have an immediate impact on transactions underway.

If you have any questions about how you will be affected by current and new taxes, or changes to taxes, please contact me directly.

 

By | 2018-02-28T10:35:51+00:00 February 28th, 2018|All Entries|Comments Off on What You Need to Know About New Taxes on Real Estate