Below are 7 facts regarding the new 15% Property Transfer Tax charges for foreign buyers, but the one fact that sticks out the most in my opinion is: Regardless of when the contract is signed, even if the contract was signed weeks ago, if it completes after August 2, 2016 there is a higher tax! – Wow. That is immediate.
But this tax increase is not applicable in our areas of Chilliwack, Abbotsford and Mission. So what does that mean? Will this maybe create a foreign buying frenzy in our area maybe? Can our prices potentially rise even more?
Time will tell but in our opinion, the impact will not be too great.
Here is what we know.
1. You must be a permanent resident of Canada to be a Canadian citizen. This also applies to companies. If a company is being purchased in Canada, that company must also be incorporated in Canada. Companies controlled in whole or in part by a foreign national, or other foreign corporation, are not Canadian companies.
2. The increased tax only applies to properties in the Greater Vancouver Regional District, and does not apply elsewhere in the Province, or the Tsawwassen First Nations Lands.
3. The tax only applies to residential properties, not commercial.
4. This is in addition to the regular PTT to be paid, and is paid on closing.
5. August 2, 2016 is when the increased tax will take effect, regardless of when the contract is signed. Even if the contract was signed weeks or even months ago, after August 2, 2016 there will be a higher tax.
6. Clients need to be prepared to have their SIN number confirmed and compared to additional government documentation such as a passport or SIN card.
7. The additional tax is payable even if there would normally be an exemption available. Transfers between related individuals, transmission to surviving joint tenant and other such items now attract the additional tax.
The data, which covers a 19 day period between June 10 and June 29, was gathered from Property Transfer Tax forms, which were recently modified to require foreign nationals to list their country of residence.
Premier Christy Clark’s Liberals are poised to adopt legislation that includes an additional 15 per cent property transfer tax on foreign nationals who buy residential real estate in Metro Vancouver. The tax, which takes effect August 2/2016, would add $300,000 to the price of a $2-million home.
Here are some stats.
• In the 5,118 transactions in Metro Vancouver just 260 involved foreign buyers 234 from China, or 4.57% of all Metro Vancouver transactions. Other countries such as Korea, Taiwan, India, Romania, Japan and the United Kingdom account for the other 26 purchases.
• Total value for Metro Vancouver transactions by foreign residents was $350,940,465, or 6.5% of the total value of all of the transaction within the 19 day period. In contrast $5,042,992,716 was attributed to Canadian Citizens and Permanent Residents.
• New data released by the province on Thursday states that only 5.1% of housing transactions across Metro Vancouver in June involved foreign buyers.
• By comparison the number of transactions by foreign nationals was as high as 14% in Richmond and 11% in Burnaby, whilst the City of Vancouver was slightly lower at 4% and the total figure for BC came in at 3.1%
• Interestingly across the province the average investment by a Canadian citizen or Permanent Resident stood at $735,000 during the 19 day period whilst that of a foreign national was significantly higher at $1.157 million