In an effort to cool housing prices in British Columbia, the current Government’s 2018 Budget has introduced numerous changes that affect our real estate market in the Okanagan.
The following tax changes are being imposed:
- Property Transfer Tax Changes: A buyer is charged property transfer tax when purchasing property in British Columbia (some exemptions apply). The amount of tax is based on a percentage of the fair market value of the land and improvements on the date of registration of the purchase.
Effective February 21, 2018, the property transfer tax will increase a further 2% on residential property on the portion of the fair market value greater than $3,000,000.
- Foreign Buyer Tax Changes: The existing 15 per cent foreign buyer tax that applied only to Metro Vancouver is being raised to 20 per cent and will apply to expanded areas.This new higher tax will also cover the Victoria and Nanaimo land districts on Vancouver Island, the Fraser Valley, Kelowna and West Kelowna.
- Speculation Tax Added: This tax will cover the same regions as mentioned above, and is aimed at absentee homeowners. The tax will start at 0.5 per cent of a home’s assessed value for the 2018 tax year and increase to 2.0 per cent in 2019. It appears that if the home is a principal residence, if the home is rented long term, or if the owner pays income tax in B.C. – these homeowners will be exempt. The effect on owners of vacation properties in our sunny Okanagan is not yet clear.
As reported by the Vancouver Sun: “NDP Finance Minister Carole James acknowledged her government hasn’t fully modelled the effect of the new tax measures on B.C. real estate prices or calculated the cost of increased auditing and enforcement. But the government wants housing prices to drop, she said.”
Obviously aimed at cooling the housing price mayhem in the Lower Mainland, these taxes are now spreading to include the Kelowna and West Kelowna real estate market, although at this time, does not cover the North Okanagan, South Okanagan or the Shuswap.
- For more info on Property Transfer Tax increases: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand
- For more info on Foreign Buyer Transfer tax: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/additional-property-transfer-tax
- For more info on the Speculation Tax: http://vancouversun.com/news/local-news/b-c-budget-2018-b-c-ndp-increases-and-extends-housing-taxes-in-effort-to-rein-in-speculation