New Property Tax for Foreign Buyers
The provincial government announced earlier today, July 25, 2016, that foreign buyers of residential real estate in the Greater Vancouver Regional District (excluding Tsawwassen First Nation lands) will be subject to an additional property transfer tax (The “Additional PTT”) of 15% of the fair market value of a foreign entity's proportionate share of property. For a more detailed overview of this new tax, please refer to the Ministry of Finance Tax Information Sheet.
In summary, the Additional PTT:
1. Is effective on August 2, 2016, regardless of when the applicable contract of purchase and sale was entered into.
2. Is in addition to the general property transfer tax payable on applicable real estate transfers registered with the Land Title Office.
3. Applies to "residential property" which includes, but is not limited to, single family residences, duplexes, multifamily residences, apartments, condominiums and nursing homes.
4. Applies to "foreign entities", being:
a) foreign nationals who are not Canadian citizens or permanent residents; b) foreign corporations that were either not incorporated in Canada or incorporated in Canada but controlled in whole or in part by a foreign national or other foreign corporation (unless the shares of the corporation are listed on a Canadian stock exchange); and c) taxable trusts, being foreign national or foreign corporations or a beneficiary of a trust that is a foreign national or foreign corporation.
5. Applies to any applicable residential property transfer, even if the transaction would normally be exempt from property transfer tax, for example a transaction between related individuals or a transfer resulting from an amalgamation.
6. Does not apply to non-residential property.
7. Requires that foreign entities registering a transfer arrange to have an Additional Property Transfer Tax Return form filed at the time the property transfer is filed with the Land Title Office.
The Additional PTT is being introduced through Bill 28-2016 Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016 [add link], which passed first reading at the provincial legislature today. This legislation is aimed at creating new measures to help make home ownership in the Lower Mainland more affordable. In addition to amendments to the Property Transfer Tax Act, Bill 28-2016 also includes proposed changes to the Real Estate Services Act to end self-regulation of the real estate industry and to the Vancouver Charter to grant the City of Vancouver the power to implement and administer a tax on vacant houses.