British Columbia’s 2018 budget introduced certain changes to the taxation of real estate. This will affect residential real estate held personally, through other legal entities, or that falls into an estate or to a beneficiary of an estate.
Effective February 21, 2018, property transfer tax for residential property will increase from 3% to 5% (on the fair market value above $3,000,000). Property transfer tax is now calculated as 1% on the first $200,000, 2% up to $3,000,000 and 5% above $3,000,000.
Further, the additional property transfer tax applicable to foreign buyers of residential properties will increase from 15% to 20%. The application of this tax is also expanded from Metro Vancouver to include the Capital Regional District, the Regional District of Central Okanagan, the Fraser Valley Regional District, and the Regional District of Nanaimo.
“Speculation tax” targeting home owners who do not pay income tax in British Columbia will now apply to residential property in Metro Vancouver, Fraser Valley, Capital and Nanaimo Regional Districts, and the municipalities of Kelowna and West Kelowna. In 2018, the tax rate will be $5 per $1,000 of assessed value of the property. In 2019, this will increase to $20 per $1,000.
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