The property transfer tax continues to apply at one per cent on the first $200,000 of resold homes, and two per cent on value between $200,000 and $2 million. The additional tax will take effect August 2, 2016, and will apply to foreign entities registering their purchase of residential property in Metro Vancouver, excluding the treaty lands of the Tsawwassen First Nation.
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Premier Christy Clark said the goal is to keep the dream of homeownership for the middle class alive, amid criticism that skyrocketing real estate prices have made it unaffordable for most ordinary British Columbians to afford homes.
British Columbia’s government has taken a lot of heat over the last few years-especially in the last six months-for ignoring Metro Vancouver’s out-of-control housing crisis.
The debate over who has been driving housing prices has been rife with accusations of racism against Chinese buyers.
Foreign buyer approach vs. income tax based approach ” The goal here is ‘let’s make Vancouver affordable to people who live and work here”.
“The data we started collecting earlier this summer is showing that foreign nationals invested more than $1 billion into B.C. property between June 10 and July 14, more than 86% of it in the Lower Mainland”, said Finance Minister Michael de Jong.
“The amendments include anti-avoidance rules created to capture transactions that are structured specifically to avoid the additional tax”, de Jong said. That includes corporations that are either not registered in Canada or are controlled by foreigners. But it would not apply to commercial property.
He adds the tax doesn’t apply to investor immigrants, secondary homes, and locals buying investment properties, but he thinks it’s a meaningful step. The fund will receive an initial investment of $75 million, and a portion of revenues from the new property transfer tax, and tax on foreign buyers.
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Fourth, amendments to the Vancouver Charter provide the legislative authority for the city to implement and administer a tax on vacant homes. She said the 15 per cent foreign buyer tax was chosen after examining similar taxes in Singapore, Hong Kong, London and Sydney. The changes will see an end to self-regulation of the real estate industry. The government has resisted, saying it didn’t want to interfere and that the issue was primarily one of rising demand for a limited supply of homes.
