The BC provincial government collects a Property Transfer Tax on sales of real estate. The tax is applicaple to both new and resale homes. The tax is calculated at the rate of 1% on the first $200,000. of value plus 2% on the remaining balance up to $2,000,000 plus 3% on the remaining amount thereafter. Although the BC Real Estate Association (BCREA) has lobbied hard for changes to and outright abolition of the PTT, the provincial government continues to resist any major changes to this significant and growing source of tax revenue.
Effective August 2, 2016, an additional property transfer tax applies to residential property transfers to foreign entities in the Greater Vancouver Regional District. The Greater Vancouver Regional District includes Anmore, Belcarra, Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lion’s Bay, Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock and Electoral Area A. The additional tax does not apply to properties located on Tsawwassen First Nation lands. The additional tax applies on all applicable transfers registered with the Land Title Office on or after August 2, 2016, regardless of when the contract of purchase and sale was entered into. Foreign Entities Foreign entities are transferees that are foreign nationals, foreign corporations or taxable trustees. Foreign nationals are transferees who are not Canadian citizens or permanent residents, including stateless persons.
Foreign corporations are transferees that are corporations: • 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 Taxable trustees are trustees that are a foreign national or foreign corporation, or a beneficiary of a trust that is a foreign national or foreign corporation. Applying the Additional Tax The additional tax on property transfers to foreign entities is 15% of the fair market value of the foreign entity’s proportionate share of a residential property located in whole or in part in the Greater Vancouver Regional District, excluding Tsawwassen First Nation lands. This tax applies in addition to the general property transfer tax. The additional tax does not apply to non-residential property. The value of the residential portion of a transfer is calculated in the same way as for the property transfer tax. The additional tax applies on the foreign entity’s proportionate share of any applicable residential property transfer, even when the transaction may normally be exempt from property transfer tax. This includes transactions such as: • a transfer between related individuals • a transfer resulting from an amalgamation • a transfer to a surviving joint tenant • a transfer where the transferee is or becomes a trustee in relation to the property, even if the trust does not change The additional tax does not apply to trusts that are mutual fund trusts, real estate investment trusts or specified investment flow-through trusts. Filing and Paying the Additional Tax Filing the Return Foreign entities registering a transfer, or their legal representative, must file an Additional Property Transfer Tax Return (FIN 532). The return must be filed at the time the property transfer is registered with the Land Title Office. Filing instruction can be found on the return, or at gov.bc.ca/propertytransfertax on the File Your Taxes page
Paying the Additional Tax The additional tax must be paid with the general property transfer tax at the time the property transfer is registered with the Land Title Office. Each transferee is jointly and severally liable for the additional tax payable. If one transferee does not pay the required additional tax, the other transferees, including Canadians, must pay that transferee’s share of the additional tax payable. Tax Avoidance All property transfer transactions are subject to audit and all additional property transfer tax returns will be reviewed and verified. The audit period is six years from the date the transfer is registered at the Land Title Office. Where transactions involve Canadian citizens and permanent residents their identity must be verified using official government issued identification. The social insurance number (SIN) must be collected and verified to be that of the transferee by viewing the SIN card and comparing the name or by viewing one of the following: • T4 Statement of Remuneration Paid (slip) • Canada Revenue Agency Notice of Assessment Invalid social insurance numbers or other discrepancies on a return will lead to an audit and investigation of the transaction. Anti-avoidance provisions exist and will be enforced to ensure all foreign entities report and pay the additional tax as required, including examining circumstances where Canadians hold property in trust for a foreign entity or are trustees where a beneficiary may be a foreign entity. Failure to pay the additional tax as required or purposely completing the general or additional property transfer tax return with incorrect or misleading information may result in a penalty of the unpaid tax plus interest and a fine of $200,000 for corporations or $100,000 for individuals and/or up to two years in prison. The penalties apply to anyone who participates in tax avoidance. Property transfers will be monitored for compliance and the province will follow up with those businesses or individuals filing incomplete or incorrect general or additional property transfer tax returns.
Further Information Online: gov.bc.ca/propertytransfertax Toll free in BC: 1 888 355-2700 Email: firstname.lastname@example.org Subscribe to our What's New page to receive email updates when information changes. The information in this notice is for your convenience and guidance and is not a replacement for the legislation. Latest Revision July 27, 2016 § Clarified that the identity of Canadian citizens and permanent residents must be verified using official government issued identification. § Clarified the social insurance number (SIN) must be collected and verified to be that of the transferee by viewing the SIN card and comparing the name or by viewing one of the following: o T4 Statement of Remuneration Paid (slip) o Canada Revenue Agency Notice of Assessment
The First-Time Home Buyers Program (FTHB) was introduced in March 1994, updated in June 2005 and again in February 2008 to provide exemptions to individuals purchasing their first home. First time Buyers can now buy a home priced up to $475,000 and not pay the Property Transfer Tax (PTT). The new rules also provide a proportional tax exemption for home priced between $475,000 to $500,000. At $500,000 and above the rebate is nil.
Qualifying buyers of new homes may be exempt if the purchase price of their home is priced up to $750,000. There is a proportional exemption for homes priced between $750,000 and $800,000. At $800,000 and above there's no rebate.
First-time home Buyers can now pay down their mortgages by any amount in the first year of ownership without being disqualified from the exemption. Gone are the PTT financing rules that required Buyers to have a minimum 70% mortgage and registered financing to qualify for the exemption.
The program carries a number of restrictions based on the value of the property purchased.
The BC provincial government announced in January 2008 the threshold at which the Home Owner Grant is phased out is increased to $1,050,000 from the previous level of $950,000. In practical terms, over 95% of BC homeowners remain eligible for the full grant.
Properties valued over $1,050,000 will have the grant reduced by $5 for every $1,000 in assessed value in excess of the new threshold. The basic grant is eliminated entirely for properties valued at $1,164,00 and higher.
The Federal government offers a GST rebate program for purchases of New Housing. The program can provide tax relief of up to 36% of the GST paid on the purchase of a New Home. There are a number of restrictions and qualifications that determine eligibility. Click on the link for details. GST/HST New Housing Rebate Program 2008
Tom Davis, REALTOR®
Personal Real Estate Corporation
Royal LePage Sussex
604 787 1456