Luxury Brokers in Vancouver Wary as Property Taxes Hiked | Mansion Global

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Vancouver’s luxury market, already experiencing a downturn since 2016, will likely take another hit with the introduction of higher tax rates for foreign and luxury home buyers, experts say.

The provincial government of British Columbia on Tuesday announced a basket of measures as part of its 2018 budget; among them was a hike, effective immediately, on property transfer taxes for foreign buyers and buyers of $3-million-plus homes (US$2.36 million and above).

Starting Wednesday, tax rates for foreign buyers were raised to 20% from 15%, while all C$3-million-plus home purchasers must now pay 5%, instead of the current 3% property transfer tax.

Not only will these taxes be applied to homes in Metro Vancouver, but they’ll also be levied in the Capital Regional District, the Fraser Valley, the Central Okanagan and the Nanaimo Regional District.

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New Exemptions to the 15% Property Transfer Tax

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.

New 15% Property Transfer Tax

The new 15% property purchase tax (the “PTT”) explained.

WHAT IS THE NEW TAX?

It is a property transfer tax of 15% payable by “foreign” buyers IN ADDITION TO the regular property transfer tax at the time a property transfer for residential property is registered in the land title office for properties located in “The Greater Vancouver Regional District” (the “GVRD”).  This includes places like Surrey, Richmond, Delta, West Vancouver, Coquitlam, etc. but not Squamish, Whistler, Abbotsford, Vancouver Island, the Okanagan, etc.

So if a foreign buyer buys a $7 million residential property in West Vancouver the total property purchase tax would be:

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WHO HAS TO PAY?

The tax has to be paid by “foreign entities”.  That means foreign citizens, foreign companies and taxable trustees.  Canadian citizens and Canadian permanent residents do not have to pay.  Foreign corporations include companies set up outside Canada and Canadian companies that are controlled by foreign persons or by foreign companies.

WHAT SORT OF TRANSACTIONS ARE SUBJECT TO THIS TAX?

The tax is payable in respect of residential properties in the GVRD purchased by foreign buyers on or after August 2, 2016 at the time the transfer is registered in the land title office.  It is payable even when the contract was finalized before August 2, 2016 and the parties unaware there would be a new tax.

ARE THERE ANY LOOPHOLES?

Not many.  Non-residential property is not subject to the extra tax nor are properties outside the GVRD.   Real estate investment trusts and mutual fund trusts are not subject to the extra tax.  Penalties of $100,000 for individuals and $200,000 for corporations apply to anyone who participates in illegal tax avoidance.  Presumably this includes lawyers, accountants and realtors who assist in illegal tax avoidance.


Written by Peter Scarrow, former immigration lawyer, currently is the Director of Asian Business at Macdonald Real Estate Group.

‘Fundamental Issue in Vancouver Market Is Supply’ | Bloomberg TV Canada

Jonathan Cooper, Vice President, Operations at Macdonald Real Estate Group joins Bloomberg TV Canada’s Rudyard Griffiths to discuss the impact of the 15 percent property tax for non-Canadian citizens and non-permanent residents in Metro Vancouver.

 

About Macdonald Real Estate Group
Based in Vancouver, Canada, Macdonald Real Estate Group (MREG) has an annual sales volume of over $7 billion and over $2 billion in assets under management. With more than 20 offices and nearly 1,000 staff and REALTORS®, MREG offers a full range of real estate services, including residential and commercial brokerage, property and strata management, project marketing, and the MREG Canadian Real Estate Investment Centre in Shanghai, China. Macdonald Realty is the residential division of Macdonald Real Estate Group. For more information, visit www.macrealty.com.

B.C. turns from foreign buyers to investor immigrants as Vancouver’s affordability crisis continues | Georgia Straight

A whopping 90 percent of Metro Vancouver residents support the region’s new 15-percent tax on foreign buyers of residential real estate. At the same time, only three percent of respondents to the same poll, conducted by the Angus Reid Institute, say the tax goes far enough, and 71 percent describe it as simply a step in the right direction.

While the region waits to see what kind of impact the new tax will have on the market, pundits are debating what additional measures the government should take. That’s turned a lot of attention to the Quebec Immigrant Investor Program (QIIP), a path exclusively for wealthy immigrants that, despite its name, lets newcomers settle in B.C. Those home buyers are counted as locals and therefore are not subject to the region’s new tax on foreign nationals. Some observers argue the QIIP deserves much of the blame for driving up the price of a home in Vancouver.

On July 28, Premier Christy Clark revealed she’s approached her Québécois counterpart and opened discussions on the issue.

 “We’re going to work together on it,” she told Global News. “We’re going to try and support him [Premier Philippe Couillard] in finding ways to make sure their program, their investor program, is for Quebec and for Quebec alone. And that when people come into Quebec, that’s where they stay.”

But eliminating this source of wealthy immigrants might not have as sizable an effect on Vancouver real estate as some have suggested.

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The ripple effect – a 15% foreign investment tax in Metro Vancouver

What time in our history has ever been like the last 2 months to be a homeowner, a Buyer, a Seller or a Real Estate professional?

If you live under a rock (no slight to “unaffordable housing” in Metro Vancouver) there has been some significant changes in the BC and particularly Metro Vancouver Real Estate market. The biggest impact on all of us is no doubt the 15% foreign investment tax applicable to anyone who is not a Canadian Citizen or Permanent Resident of Canada.

Introduced July 25 by the current BC Liberal Government, this tax was introduced as massive public pressure for a reaction from the government, over 2 years in the making.

I am going to do my best to remove all opinions of how this explosion of real estate values in our communities was handled, or better yet, not handled for so long by our government. We elected them, we need to live with them, for now.

The tax makes sense in many ways yet in its simplest form, is the relation of the power of National currencies at play. Imagine investors coming to our country, a stable, safe, warm and loveable cousin of the US. Vancouver, where our weather is great year round, we enjoy an excellent quality of life and have one of the most beautiful cities in the world.

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Thousands of Metro Vancouver real estate deals caught by tax deadline

‘Last week was pretty hectic,’ realtor said of rush to avoid new tax by midnight cutoff

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For some the last few weeks was a rush to wrap up real estate deals before Aug. 2 tax was imposed on Metro Vancouver property deals. (DeWitt Clinto/Flickr)

Thousands of home buyers and sellers in Metro Vancouver reacted with ‘shock and disbelief,’ madly rushing to beat the Aug. 2 deadline of the new 15 per cent foreign buyer real estate tax.

Realtors estimate 3,000-to-4,000 deals were affected.

“It’s so fast. Just everyone is shocked,” said Jin Liu, a realtor with Remax.

After the legal documents flutter to the floor industry watchers warn there will be challenges to the new tax, seen by many as unfair.

Some say it violates the North American Free Trade Agreement (NAFTA) which prohibits governments from imposing policies that punish foreigners. Top lawyers say the tax is ripe for a constitutional challenge.

The foreign buyer tax, aimed at cooling Vancouver’s torrid housing market, was announced July 25. The aim was to chill speculative investing and preserve affordable homes for people living and working in Canada.

Up to 4,000 deals affected by new tax

Buyers and sellers were caught in the sting of the Aug. 2 tax that has been applied even to deals struck long before it existed.

“We weren’t given notice …. so most likely the deals will collapse. It’s not fair for everyone,” added Liu.

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One in 10 home sales in Vancouver region went to foreign buyers | The Globe and Mail

B.C. Premier Christy Clark says new data that show foreigners bought one in every 10 homes sold in Metro Vancouver’s superheated market over five weeks forced her government to introduce a new and substantial tax on international buyers, but she says the surprise levy is intended to stop the spike in prices, not devalue the equity built up by existing homeowners.

Foreign buyers in B.C.
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Statistics the province released on Tuesday show buyers who were not Canadian citizens or permanent residents made up 10 per cent of all home sales in Metro Vancouver between June 10 and July 14. Those transactions totalled $885-million. An earlier release of data covering June 10 to 29 and not including end-of-month sales found only 5 per cent of the sales in the region involved foreigners.

The proportion of international buyers was higher in the suburbs of Burnaby and Richmond, with nearly one in five of all homes sold in those cities going to people from countries other than Canada. The rate for Vancouver proper was 11 per cent, and 7 per cent across all of British Columbia.

“There need to be more houses on the market that are available to local people,” Ms. Clark told The Globe and Mail.

Next Tuesday, 22 communities will start levying 15 per cent in additional property transfer taxes on any foreign home buyer without permanent residency in Canada, as well as foreign corporations or Canadian-registered corporations owned or controlled by foreigners.

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BNN Interview about the New 15% Foreign Buyers Tax

The B.C. government announced a new plan to introduce a 15% property transfer tax for non-Canadian citizens and non-permanent residents in Metro Vancouver. The move comes as the government attempts to combat the growing affordability crisis in the Vancouver area. Business News Network (BNN) speaks with Jonathan Cooper, Vice President of Operations at Macdonald Real Estate Group about the impact.

 Vancouver realtors unhappy with new foreign buyers tax

(To view the video on mobile devices, please click here for direct play on BNN.)

 

About Macdonald Real Estate Group
Based in Vancouver, Canada, Macdonald Real Estate Group (MREG) has an annual sales volume of over $7 billion and over $2 billion in assets under management. With more than 20 offices and nearly 1,000 staff and REALTORS®, MREG offers a full range of real estate services, including residential and commercial brokerage, property and strata management, project marketing, and the MREG Canadian Real Estate Investment Centre in Shanghai, China. Macdonald Realty is the residential division of Macdonald Real Estate Group. For more information, visit www.macrealty.com.