Top 5 changes impacting real estate in BC
Top 5 changes impacting real estate in BC:
1. Increased Property Transfer Tax on homes above $3 million:
- Increased by 2% on homes above $3 million; instead of 3% it's now 5%.
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- 1% on the first $200k
- 2% between $200k and $2 million
- 3% between $2 million and $3 million
- 5% on $3 million and above
- Put into context, when a person purchases a home valued at $5.5 million, they will now pay an increase of $50,000 in PTT, with the total taxes payable of $193,000.
2. Increased School Tax on homes above $3 million:
- Starting in 2019, an additional school tax will be applied to homes with an assessed value above $3 million.
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- 0.2% on assessed value between $3 million and $4 million
- 0.4% on assessed value over $4 million
- Put into context, a home valued at $5,5 million will need to pay an additional $8000/year in property tax, on top of their regular annual tax. Click for more: https://westvancouver.ca/government/financial-information/school-tax
3. Increased Foreign Buyers Tax from 15% to 20%:
- Increased to 20%, effective immediately.
- Previously Metro Vancouver, but expanded to Fraser Valley, Greater Victoria, Nanaimo & Central Okanagan.
- Put into context, a foreigner who purchases a home valued at $5.5 million will now pay an additional $275,000, with total taxes payable of $1,100,000.
4. New Speculation Tax targeting people who don't pay income tax in BC and leave their property vacant:
- New annual tax on residential real estate targeted at foreign and domestic homeowners who do not pay income tax in BC. Tax will impact:
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- Domestic homeowners with 2 homes, if one is vacant (eg. Vancouver resident with a vacation home in Kelowna). In this instance, there will be a non-refundable income tax credit, to help offset the tax; however, the credit will likely not cover 100% of the tax.
- Out of province property owners (eg. Albertans who own a vacation home in Nanaimo).
- Satellite families, which are households with high worldwide income that pay little income tax in BC.
- The tax applies to Metro Vancouver, Fraser Valley, Capital & Nanaimo Regional Districts, and Kelowna & West Kelowna.
- The tax rate:
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- 0.5% of assessed value in 2018
- 2.0% of assessed value in 2019
- Put in context, a person owning a home valued at $5.5 million will now pay $27,500 in 2018 and $110,000 in 2019. Tax payable annually if the home is vacant.
5. Increased Tax on short-term rental properties, like AirBnb:
- Airbnb will now charge 11% tax. The taxes include the 8% provincial sales tax and municipal or regional district taxes of up to 3%.