WHAT DOES THE BC NDP’S 2018 BUDGET MEAN FOR THE REAL ESTATE INDUSTRY
What does the BC NDP’s 2018 Budget mean for the Real Estate Industry
What does the BC NDP’s 2018 Budget mean for the Real Estate Industry The BC NDP presented the budget for 2018 earlier this week generating a buzz amongst British Columbians. This long-anticipated announcement came with changes from the government that are meant to soften demand for Real Estate, in turn creating a more affordable environment. Some of the key changes that have a direct effect on the Real Estate Industry include:
- An increase in the Property Transfer Tax rate for homes priced over$3,000,000. As of February 21, 2018 the PTT charged on properties valued over $3,000,000 has been increased by 2% to a total of 5%. The transfer tax will be calculated as follows:
- 1% on the first $200,000,
- 2% up to $2,000,000
- 3% between $2,000,000 and $3,000,000
- 5% above $3,000,000.
- For any transactions written prior to February 21st, the closing date must be no later than May 18, 2018 to be exempt from the increase.
- An increase in the Foreign Buyers Tax as well as an expansion of the regions affected by this tax. The Foreign Buyer Tax has been increased from 15% to 20% and is now expanded beyond Metro Vancouver to the Fraser Valley, Okanagan, Kamloops, Greater Victoria and Nanaimo Regional District. Unless the transfer of property is registered prior to February 20, 2018, the new Foreign Buyer Tax will apply to all foreign buyers in the above-noted regions.
- Better tracking of pre-sale contract assignments by the government. This initiative is meant to help the government enforce capital gains owing on any profits from assignments.
- The introduction of a speculation tax. Commencing in 2018, owners of properties located in the areas covered by the Foreign Buyer Tax will be responsible for paying 0.5% of the property’s assessed value if the property is vacant and the beneficial owner does not pay income tax in British Columbia. This tax is expected to increase to 2% by 2019. Full details on the speculation tax are yet to be released.
Increased tracking as to the beneficial owner at closing Both the Provincial and Federal government are looking to obtain additional information on owners at closing to ensure taxes are being paid accordingly.
For more information on the changes announced by the government, visit https://www2.gov.bc.ca/gov/content/taxes/property-taxes/propertytransfer-tax/understand/additional-property-transfer-tax#specified-areas
While we appreciate the government’s efforts to create a more affordable and fair Real Estate environment for local buyers, we are left asking ourselves does this do the trick? Let us know what you think.
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