Property Transfer Tax
You are charged property transfer tax when you make changes to a property’s title, including:
acquiring a registered interest in the property gaining an additional registered interest in the property becoming the registered holder of a lease, life estate, or right to purchase for the property.
The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold detached or strata unit. The tax is charged at a rate of:
- 1% on the first $200,000,
- 2% on the portion of the fair market value greater than $200,000 and
- up to and including $2,000,000, and
- 3% on the portion of the fair market value greater than $2,000,000 and
- up to and including $3,000,000 and
- 5% of the balance.
For example, if the fair market value of a property is $450,000, the tax paid is $7,000.
If you’re a foreign national or foreign corporation and the residential property is located in the Greater Vancouver Regional District and other applicable districts, you also pay the 20% additional property transfer tax on the fair market value of your proportionate share.
Empty Homes Tax (“EHT”) – City of Vancouver Applies if the property is vacant more than 180 days per year and is not the principal residence of the owner. • The EHT is equal to 1.0% of the Property’s Assessed Value (PAV) if reported (fines and penalties otherwise) Example: An owner of a property with a PAV of $4,500,000 that is vacant and not a principal residence will pay $45,000 per year on top of their regular property taxes. Please find additional details in the following link to the City of Vancouver website for the EHT. http://vancouver.ca/home-property-development/empty-homes-tax.aspx School Tax (Provincial): Starting in 2019, an additional school tax applies to most high-valued residential properties in the province, including:
- Detached homes
- Stratified condominium or townhouse units
- Most vacant land The additional school tax does not apply to non-stratified rental buildings with four or more housing units.
For mixed-use properties, only the residential portion of the property’s assessed value (“PAV”)above $3 million will be taxable. The additional tax rate is:
- 0.2% on the residential portion of the PAV between $3 million and $4 million
- 0.4% tax rate on the residential portion of the PAV over $4 million
Example 1: In the case of a $3,500,000 property the School Tax equates to $1,000/year in addition to regular property taxes. ($3,500,000 minus $3,000,000 equals $500,000 multiplied by 1%)
Example 2: In the case of a property with an assessed value of $5,000,000 the School Tax equates to $6,000 in addition to regular property taxes. ($2,000 on the $1M difference between $3M and $4M plus $4,000 on the additional $1M difference from $4M to $5M) 3
The tax is designed to capture foreign and domestic speculators, satellite families who live in B.C. but do not pay their share of income taxes, as well as homeowners who hold vacant property in designated urban centres. Over 99% of British Columbians are estimated to be exempt, because they will not have a vacant second home in the affected areas. The tax applies in the Metro Vancouver Regional District (excluding Bowen Island and Electoral Area A, except the part of the electoral area that is the UBC and University Endowment Lands), the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna-West Kelowna, Nanaimo-Lantzville (excluding Protection Island), Abbotsford, Chilliwack, and Mission. Most islands are excluded.
Exemptions include the principal (primary) residences of British Columbians and properties that are used as qualifying long-term rentals. Properties will need to be rented out for at least three months to qualify for an exemption in 2018. Starting in 2019, properties will need to be rented out for at least six months, in increments of 30 days or more, to qualify for an exemption. The calculation for the Speculation Tax is based on the assessed value of the property (“PAV”).
- In 2018, the tax rate for all properties subject to the tax is 0.5% of the PAV.
- In 2019 and subsequent years, the tax rates will be as follows: o 2% for foreign investors and satellite families; o 1% for Canadian citizens and permanent residents who do not live in British Columbia; and o 0.5% for British Columbians who are Canadian citizens or permanent residents (and not members of a satellite family).
Subject to the following:
- Second properties belonging to British Columbians will be eligible for a $400,000 non-refundable tax credit, meaning second properties whose PAV is less than $400,000 will be exempted from paying the speculation tax. That is, the SPT will only apply to the PAV above $400,000.
- For property owners “facing special circumstances” will be exempt from the tax. This covers sproperties where the owner or tenant is “undergoing medical care or residing in a hospital, longterm care or supportive-care facility,” is “temporarily” absent because of their job or the owner is deceased and the estate is under the process of being administered.