Provincial Budget 2018
As you all know, B.C.’s provincial budget was unveiled yesterday. We wanted to detail some changes that will potentially affect our housing market.
In an effort to stabilize B.C.’s real estate market:
1. Increasing Foreign Buyer’s Tax
- Increased from 15% to 20%
- Extend the reach of the foreign buyer’s tax to the Capital Regional District (Victoria), Fraser Valley, Central Okanagan, and the Nanaimo Regional District.
Why? To ensure speculation isn’t pushed into neighboring real estate markets and because 15% was not enough to slow down foreign demand.
2. Tax Speculators
- Targeting foreign and domestic speculators who own residential property in B.C., but don’t pay taxes here, including those who leave their units vacant
- New Speculation tax will be applied broadly to ensure speculators aren’t pushed into neighboring markets (applied to Metro Vancouver, Fraser Valley, Capital and Nanaimo Regional Districts, Kelowna, West Kelowna)
3. Increasing Property Transfer Tax on Homes worth over $3 million
- Increased from 3% to 5% on the fair market value of a home
- The government is also increasing the school tax on homes assessed over $3m (starting in 2019)
4. Moving to Stop Tax Evasion in Pre-Sale Condo Reassignments
- We see a lot of assignments, as there are many new developments in the Greater Vancouver area.
- Buyers often re-sell a contract for a condo under construction (sometimes multiple times), and the government is cracking down on those not paying the appropriate tax
- As a first step, the government is building a database of Pre Sale assignments. Developers will collect information and report about the assignments. This information will be shared with federal and provincial tax authorities to ensure appropriate taxes are paid.
5. Ending Hidden Ownership
- The province wants to crack down on speculators, tax frauds and money laundering
- Currently, there is a lack of transparency in the market (“owners” can be numbered companies, offshore and domestic trusts, or stand-in owners)
- The province will require additional information on Property Transfer Tax Forms
- They are establishing a registry with information about beneficial ownership of land in B.C., administered by LTSA
- The province will require corporations to hold accurate information on beneficial owners in their own records offices (info will be available to authorities)
- Basically, the government wants a registry to know who owns what, and wants to track how real estate changes hands
Some other changes of note:
- Better monitoring of land in the Agricultural Land Reserve (ALR). This land should be used for farming, not mansions.
- Monitoring who is abusing Homeowner Grants in B.C. by working with the Federal Government and collecting Social Insurance Numbers as part of the application process. (cross referencing to prevent inappropriate claims of the Grant).
It’s not all doom and gloom:
- The government is investing $6.6 Billion over 10 years into affordable housing (B.C. wide)
- The government is also investing $378 million over 3 years in rental housing for the ‘middle income’ residents so they can live in the area they work in.
- Investing in affordable housing for women and children fleeing violence
- Building housing for Post-secondary students. 5000 new spaces in student housing on campus so students have an affordable place to live.
- Constructing 1750 social housing units for Indigenous people
- Build 1300 new modular homes for people in need (with more to come)
*The above information was taken from www.gov.bc.ca
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