On Feb 20, 2018, the NDP government announced their budget that made significant changes to many aspect of the province, including in the areas of real estate. The changes included property transfer tax and came in effect on Feb 21, 2018 and the Speculation Tax.
It seems uncharacteristic of Canadian government to make such a drastic changes to take effect immediately, but it seems that these are done and will continue to be the new trend, in order to prevent the real estate market to go on a frenzy – as people may rush to complete their transaction if the changes in law are given a period of time to take effect.
This column will focus on the changes to the Property Transfer Tax for foreign buyers. It is very important to clarify from the very beginning that the additional PTT tax is only applicable to residential properties or residential portion of a property. Therefore, if you are buying a commercial property or farm that does not have any residential portion, then the additional PTT is not applicable.
Previous PTT additional tax
Before Feb 21, 2018, the additional tax was set at 15% of the fair market value. I discussed on the previous column how fair market value is determined by the PPT branch so please refer to that for details.
The area that was affected by the old PTT additional tax was limited to Greater Vancouver District, which included roughly from West Vancouver to Fort Langley. Therefore, it did not include areas such as Abbotsford, Chilliwack, Kelowna or Victoria.
New PTT additional tax
After Feb 21, 2018, the PTT additional tax went up to 20% and the area was expanded to include the following areas:
Capital Regional District
Fraser Valley Regional District
Greater Vancouver Regional District
Regional District of Central Okanagan
Regional District of Nanaimo
The additional property transfer tax doesn’t apply to properties located on Tsawwassen First Nation lands.
To see if your area is included and for exact areas that are affected, please visit:
It is also important to remember that you have to pay additional PTT on top of the basic PTT; which means, in total you may have to pay roughly 21-25%, depending on the value of the property.
Transition period
There is a transition period set in place to allow for those who already signed the contract before Feb 21, 2018. If the original purchase and sale contract was signed before Feb 21, 2018, then the new additional tax law will not apply, as long as the transaction completes by May 15, 2018.
However, this does not apply if the contract gets assigned to a new person after Feb. 21, 2018, even if the original contract was entered into before that date.
For this reason, if you as a foreigner bought a presale condo before Feb 21, but is completing after May 15th, you are now subject to the new boundary and the rate. Only legal way to avoid the additional PTT is to assign the presale contract.
Exemptions
The exemption for PNP work permit holders still apply to the new additional tax law. It needs to be emphasized that only those of PNP holders are eligible for the exemption and does not apply to any other work permit holders.
Refunds
Refunds may be available for those who get PR within a year of registration and apply for rebate within 6 months from then.
If you have further questions, please do not hesitate to contact our office and speak to myself or any of my friendly staff.
This is for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind.
If you have further questions, please do not hesitate to contact our office at (778-379-8577) and speak to Paul Choi or any of our friendly staff.