Yesterday the Government announced that there would be an additional 15% property transfer tax for foreign owners of residential property in the Greater Vancouver Regional District starting August 2nd, 2016.
This would be an additional $150,000.00 in property transfer tax on every 1,000,000.00 residential purchase.
The areas that are included in the Greater Vancouver Regional District is described as : 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.
Vancouver Island, Victoria and the Gulf Islands are not included in this area. The question is, will it push foreign buyers out this way to avoid that tax? If it does and if it greatly has an impact on our market then will we follow suit?
It will be interesting to see how this impacts the Vancouver Market and our Market. We can only watch and see.
This foreign tax is in addition to the regular property transfer tax that all Buyers pay, which is :
1% on the first $100,000.00
2% on $200,000 to $2,000.000.00
3% on any amount over $2,000,000.00.
These taxes are calculated on the fair market value of a property so you cannot transfer to someone for $1000.00 and hope to avoid the tax. You can sell it for that amount but the transfer tax will be calculated on fair market value.
For Canadian Citizens or permanent residents of Canada there are exemptions of the regular property transfer tax for (eligible) first time buyers up to $475,000.00 and other credits for newly built homes as your primary residence, up to $750,000.00. You must consult your lawyer/accountant to determine your eligibility for tax credits.