2018 Housing Tax Update
In the past few weeks there has been a lot information flying around about all the new taxes and housing implications.
We thought it would be beneficial to break that down in point form. Finance Minister Carole James has stated her intent is to try to lower the price of housing, and she is certainly well on her way to doing that with last month’s announcement in the BC Budget of several new and revised taxes on real estate. Summaries of each of these taxes are below:
Speculation Tax (new)This new tax is meant to target foreign and domestic homeowners who do not pay income tax in B.C. According to the BC government, the aim is to target foreign and domestic speculators, and out of province property owners, but it will certainly capture many locals as well. The details:
- effective for the 2018 tax year
- tax starts at .5% of assessed value in 2018 and jumps to 2% in 2019
- apply to homes not used as primary residence or as long-term rental, and where income tax is not being paid in BC
- applies to homes in Metro Vancouver, Greater Victoria, Kelowna and West Kelowna, Nanaimo to Lantzville, Abbotsford, Chillwack, and Mission
- a nonrefundable income tax credit will help offset the tax for BC residents, but it will likely not cover the costs for many locals, especially for low-income seniors whose second properties have higher assessed values. This nonrefundable tax credit is capped at $2,000.
Increased School Tax (new)This new tax increases the school taxes on home valued over $3,000,000. The details:
- effective 2019
- applies to all of BC
- 0.2% tax rate on the residential portion assessed between $3 million and $4 million
- 0.4% tax rate on the residential portion assessed over $4 million
Foreign Buyers Tax (increased and expanded)The 15% foreign buyers tax was implemented in the summer of 2016 in Metro Vancouver, but the B.C. government announced in its 2018 Budget that this tax would be increased and expanded to include areas outside of Metro Vancouver. The details:
- effective immediately (February 21, 2018)
- tax has been increased to 20% from 15%
- expanded to include the Capital Regional District, Fraser Valley, Central Okanagan and Nanaimo Regional District
- contracts written before Feb. 20, 2018 with a closing on or before May 18, 2018 are exempted in regions outside of Metro Vancouver
Property Transfer Tax (increased)The Property Transfer Tax (PTT), which is charged to the buyer when the property’s title transfers, has been increased for properties with fair market values over $3,000,000. The details:
- effective immediately
- tax increased on residential properties from 3% to 5% on the value of homes over $3,000,000
- remains at 1% on first $200,000, 2% on amounts between $200,000 and $2,000,000; 3% on amounts between $2,000,000. and $3,000,000.
- applies to all of BC
- contracts written before Feb. 20, 2018 with a closing on or before May 18, 2018 are exempted from paying the additional property transfer tax.