Amendments to the Additional Property Transfer Tax on Foreign Buyers
Further to our article on the same topic posted on December 6, 2017, effective February 21, 2018 the additional property transfer tax rate is increased to 20 percent from 15 percent. In addition, the tax is expanded to the following areas:
- Capital Regional District
- Fraser Valley Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
For these newly added areas, there are transitional rules that may exempt certain transactions entered into before February 21, 2018. For instance, if the change of title occurs on or before May 18, 2018 and the property transfer is subject to a written agreement dated on or before February 20, 2018, this tax is not payable. However, if the written agreement is assigned to a foreign entity on or after February 21, 2018, the tax is payable.
There are no transitional rules for transactions for the Greater Vancouver Regional District.
Same as before, the tax only applies to residential properties and residential portion of properties, such as residential portion of farm land (eg. farmer’s home).
Also effective February 21, 2018, the rate for the regular Property Transfer Tax which applies to all real estate transactions (except exempted transactions) has increased for residential properties above $3 million. The tax is now as follows:
- 1% on the first $200,000,
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
- 3% on the portion of the fair market value greater than $2,000,000, and
- If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000.
Eg. if the property is classified entirely as residential and has a fair market value of $4,500,000, the tax is $143,000, calculated as follows:
- 1% on the first $200,000 = $2,000
- 2% on portion greater than $200,000 and up to and including $2,000,000 = $36,000 ($2,000,000 – $200,000 = $1,800,000 X 2% = $36,000)
- 3% on portion greater than $2,000,000 = $75,000 ($4,500,000 – $2,000,000 = $2,500,000 X 3% = $75,000)
- A further 2% on the portion greater than $3,000,000 = $30,000 ($4,500,000 – $3,000,000 = $1,500,000 X 2% = $30,000)
- $2,000 + $36,000 + $75,000 + $30,000 = $143,000
For more information, please visit gov.bc.ca/propertytransfertax. For enquiries on this topic, please contact one of the lawyers in our Real Estate Group.