EXEMPTION FROM THE 15% TAX
The original announcement that work permit holders would be exempt from the 15% additional property transfer tax was made on January 29, 2017.
On March 17, Premier Christy Clark finally introduced the details of the new exemption to the 15% property transfer tax applied to certain “foreign nationals” who purchase residential properties in the Greater Vancouver Regional District. As we expected the devil is in the details. There are a number of categories of work permit holders. Just as we expected, it turns out that not all holders of work permits will be treated equally. Most work permit holders will still have to pay the 15% tax.
The exemption from the tax will only apply to Provincial Nominees under the B.C. provincial nominee program (“PNP”). They have to be “nominated” by B.C. so that other holders of work permits such as international students, executive transferees, or individuals nominated by other provinces will not qualify for the exemption. Moreover:
- The exemption only applies to provincial nominees who treat the property as a principal residence;
- The exemption may be claimed only once. It the provincial nominee buys another GVRD property he must pay the 15% tax;
- Evidence of provincial nominee status has to be provided at the time the documents are filed at the Land Title Office.
REFUNDS OF THE 15% TAX FOR CERTAIN INDIVIDUALS
The new rules also provide that the following buyers who have already paid the tax will be entitled to refunds:
- Foreign nationals who held B.C. PNP certificates or were confirmed as provincial nominees and purchased GVRD residential property between August 2, 2016, and March 17, 2017;
- Individuals who became permanent residents or Canadian citizens within one year of the date the property transfer was registered in the Land Title Office
Refunds for permanent residents and citizens can only be claimed:
- in respect of only one property;
- where the property has been used as a principal residence;
- where the owner moved into the residence within 92 days of property registration; and
- continued to live in the property for one full year after the date the property transfer was registered.
Clearly most work permit holders are still subject to the 15% tax. It seems that the exemptions are designed primarily to accommodate the PNP holders working in B.C.’s growing high technology industry, the fear being that the high cost of housing may be an impediment to economic growth in this critically important sector.
Meanwhile, work permit “status” issues can be somewhat complex. Foreign national buyers holding work permits and their realtor advisors who are uncertain about whether an exemption would apply should consider consulting their immigration and conveyancing lawyers before entering into a binding agreement to purchase GVRD residential property.
Written by Peter Scarrow, former immigration lawyer, currently is the Director of Asian Business at Macdonald Real Estate Group.