The Fighting Against Forced Labour and Child Labour in Supply Chains Act – What You Need to Know
Insights
Important changes to the B.C. Property Transfer Tax Act and the amount of tax to be paid on the transfer of property in British Columbia have been recently announced. The B.C. Provincial Government revealed the changes on February 16 as part of the province’s budget for 2016.
This new B.C. budget contains three major changes to the B.C. Property Transfer Tax Act:
- The B.C. property transfer tax rate is now 3% of the value of property exceeding $2 million.
- A new tax exemption applies to newly-constructed B.C. homes valued at $750,000 or less.
- The B.C. Government will soon begin collecting new citizenship and residency information about property buyers.
New 3% B.C. Property Transfer Tax Rate on the Value of Property exceeding $2 million
On transfers occurring on or after February 17, 2016, Property Transfer Tax will be payable at a rate of 3% on the value of a transferred property that exceeds $2 million. Previously the rate had been 2%.
The amount of Property Transfer Tax payable on the value of property up to $2 million will remain the same as it was before the budget was released (1% on the first $200,000 and 2% on the amount between $200,000 and $2 million). As before, Property Transfer Tax is due when the transfer of a property is registered with the Land Title and Survey Authority of B.C.
New Tax Exemption on Newly-Constructed B.C. Homes of up to $750,000 in Value
On transfers occurring on or after February 17, 2016, a new Property Transfer Tax exemption will apply to newly-built homes valued $750,000 or less.
This new exemption is only available for a property 1.24 acres or smaller where the purchaser:
- is a Canadian citizen or permanent resident;
- uses the property as a principal residence;
- inhabits the property within 92 days of registering the transfer; and
- continues to inhabit the property until at least one year from the registration date.
A partial exemption is also available for properties valued between $750,000 and $800,000.
A newly-built home includes not only a newly-constructed detached house but also a newly-constructed condo unit, subdivided unit or manufactured home. Purchasers who purchase vacant land may also apply for a refund of Property Transfer Tax if they construct a newly-built home on the land and occupy the home before the first anniversary of the purchase. These exemptions and refunds are available to all purchasers of newly-built homes and are not limited to first-time home buyers.
B.C. Provincial Government to Collect New Information about Property Buyers
The budget also contains new requirements on purchasers to disclose the following information when registering a property transfer:
- Individuals must disclose whether they are Canadian citizens or permanent residents and, if they are not, they must provide their country of citizenship.
- Corporations must disclose their total number of directors, which of those directors are Canadian citizens or permanent residents and the name, address and country of citizenship of those directors that are not Canadian citizens or permanent residents.
- Purchasers who purchase property as “bare trustees” must disclose that fact and must provide citizenship and residency information about the settlor and beneficiaries of the bare trust equivalent to the information provided by individual and corporate purchasers.
These disclosure requirements have not yet come into force but are expected to be implemented by regulation sometime in Spring 2016. The B.C. Government has said that information collected from purchasers will be shared with the Canada Revenue Agency.
EKB’s Commercial Real Estate team is experienced and knowledgeable in this area and can assist you further.
