BC Housing Taxes and What You Should Know
Property Transfer Tax / Foreign Buyer Tax / Speculation Tax / Underused Housing Tax
British Columbia has initiated several taxes that all purchasers should be aware of.
Property Transfer Tax:
When you purchase or gain an interest in property that is registered at the Land Title Office, your legal professional must file a property transfer tax return and you must pay property transfer tax, unless you qualify for an exemption.
Property transfer tax should not be confused with annual property taxes.
Annual property taxes are paid yearly to your municipal or rural tax office for each property you have a registered interest in to fund services in your area.
Further info on Property Taxes: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax
In addition to 'Property Transfer Tax', there are three additional taxes implemented:
- Foreign Buyer Tax
- Speculation Tax & Satellite Families
- Unused Housing Tax
Foreign Buyer Tax:
The BC Foreign Buyers Tax is a 20% tax added to the Property Transfer Tax when a foreign citizen or non-permanent resident of Canada purchases a residential property in designated regions on Vancouver Island.
Here is a link to the government declaration for the Foreign Buyer Tax
The taxable regions are expanding and will come into effect in January 2023. Taxable regions and further info: https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy-tax/how-tax-works/taxable-regions
Foreign Buyer Ban:
There is an upcoming ban on homebuying by foreign investors which does not include permanent residents or temporary residents.
This will be implemented in January 2023. You can find further details at this link:
Canada Foreign Buyer Ban Starting In January – But Permanent and Temporary Residents Exempt - Canada Immigration and Visa Information. Canadian Immigration Services and Free Online Evaluation.
The BC Speculation Tax is an annual tax based on how you use your property in major urban areas. For 2019 and onwards, the speculation and vacancy tax rate varies, depending on your residency and where you pay income tax: 2% for foreign owners and satellite families, 0.5% for British Columbians and other Canadian citizens or permanent residents who are not members of a satellite family.
A satellite family is defined as a family where less than 50% of the combined household income is taxed in Canada on Canadian income tax returns of course.
As an example, you may have a resident spouse and perhaps a non-resident spouse and the non-resident individual is the main income earner in the family. And, the non-resident spouse’s income is more than 50% of the combined family household income. That is a situation where the resident spouse is a member of a satellite family.
An important point here is that you can still be a member of a satellite family even though you are a Canadian citizen or a BC resident. So, look closely at the definition of a satellite family and see if you fall into that definition.
Find out more here: Speculation & Vacancy Tax
This tax supports the affordable housing crisis and is applicable to all vacant homes. Read More: Speculation and vacancy tax will help housing affordability in new communities | BC Gov News
Underused Housing Tax:
Additionally, there is a new tax as of 2022 for Underused Housing. This tax is applicable to Non-residents of Canada who own vacant real estate. It is an annual tax of 1% of the appraised property value.
Further info: https://www.canada.ca/en/department-finance/programs/consultations/2021/tax-unproductive-use-housing-non-resident-non-canadian-owners/underused-housing-tax.html
*For more information on BC's related property taxes, please call Charlotte at the contact info below. Charlotte is an expert in this area and can help you with your questions.