Foreign Buyer Tax in Victoria? You may recall that late this summer the provincial government rolled out a 15% property transfer tax applicable on homes purchased by foreign buyers. The taxation area was limited to Metro Vancouver only, with the caveat that the government would have the ability to levy the tax on any other area in BC if they saw the need.
This week BC's Ministry of Finance released new foreign buyer data that revealed a month over month increase in foreign buyers into the Capital Regional District (CRD).
The increase in sales in October has brought new attention to the CRD and Minister of Finance Michael de Jong has said he is watching the upward trend closely.
New data also shows that foreign buyers are slowly increasing once again in the Vancouver area.
The government notes in their release that, "There is a period of distortion in the market any time a tax is introduced or changed...As time goes on and the market readjusts, trends such as the rate and volume of foreign demand will normalize to levels we can expect to continue."
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Recently your Board submitted recommendations to the provincial government via their Select Standing Committee on Finance and Government Services regarding the potential roll out of a foreign buyer tax. From that submission:
We request that a foreign buyer Property Transfer Tax not be levied in Victoria as it has been in Metro Vancouver. The fundamentals of the Victoria area market are different than in Vancouver. For example, in the past three years, Vancouver's benchmark home value increased 70.3 per cent. Over the same time frame, the Victoria area benchmark value increased by 28.6 per cent. Though both areas see increase in property values, Victoria sees nowhere near the price appreciation that Vancouver has. As well, last year approximately 2 per cent of buyers were from out of country, very different than the double digit numbers we see in areas of Metro Vancouver.
If any further PTT changes are rolled out, please consider grandfathering in any real estate transactions already underway. Fairness and market stability must be considerations for tax changes. Exemptions for contracts that are already signed have been standard operating procedure in the past, and we urge that it be so in the future.
Your Board will continue to work with local and provincial government to help educate decision makers on the ramifications to the local economy when adding new property transfer taxes.
If you have out-of-country clients who are asking about this potential tax - there is no way for the Board to predict if and when the government will choose to roll the tax out in the CRD. When the tax rolled out in Vancouver it did not allow for grandfathering of existing in progress transactions so please be aware of the government's attention on your trading area.
*courtesy of the Victoria Real Estate Board