As of August 2nd, 2016, foreign purchasers and entities are now taxed another 15% property transfer tax in addition to the general property transfer tax.
The tax is payable when the title is being transferred (i.e. at the completion). However, it is only applied to specific properties in a specific area.
The additional tax does not apply to trusts that are mutual fund trusts, real estate investment trusts, or specified investment flow-through trusts.
What is a foreign entity
A foreign entity is a party that is neither Canadian permanent resident nor Canadian citizen. If a non resident/non citizen registers a company in British Columbia the additional tax still applies. A party to a transaction is the subject to the document check. British Columbia driver license will not suffice as a sole identity proof anymore.
The tax is attached to the property title. That is why no matter how many Canadians there are on the title the tax is payable on the whole transaction amount if there is at least one foreign entity and everybody is liable separately and collectively for the tax.
Only The Greater Vancouver Regional District (The GVRD) is affected by the new tax. The GVRD includes Anmore, Belcarra, Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lion’s Bay, Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock and Electoral Area A. The additional tax does not apply to properties located on Tsawwassen First Nation lands.
Types of Property Affected
Only residential properties are affected by the new tax. Tax is also applied to any mixed use developments that contain residential units.
If you are unsure whether the tax is applied to yourself and/or your company please get a legal advise. Avoiding the tax is considered to be a criminal offence.
As per Board approximately one in ten purchasers of real estate in the GVRD is a foreign entity. It is expected that the new tax will slow down the market, however, it is hard to tell to what extent.