On February 16, 2016, the British Columbia government released its 2016 budget (Budget). Contained in this budget were several important changes to the Property Transfer Tax Act (PPTA).
INCREASE IN PROPERTY TRANSFER TAX RATE FOR PROPERTY IN EXCESS OF C$2 MILLION
The Budget introduced a third property transfer rate of three per cent on the portion of fair market value of a property over C$2-million. The one per cent rate on the first C$200,000 of property value and the two per cent rate on the value of property between C$200,000 and C$2-million will continue to apply. These taxes are payable at the time of registration of transfer of title to the purchaser. The new tax rate will apply to transfers registered on or after February 17, 2016.
EXEMPTION FOR NEWLY CONSTRUCTED HOMES UP TO C$750,000 VALUE
The Budget also set out that newly built homes priced up to C$750,000 will be fully exempted from property transfer tax when bought by individual Canadian citizens or permanent residents as a principal residence, occupancy is taken within 92 days of registration of title and the purchaser lives in the residence for a full year. Partial exemptions are available for new housing valued greater than C$750,000 up to C$800,000. New housing includes newly constructed units, newly subdivided units and new manufactured homes placed on a parcel of land. Unlike prior exemptions of the property transfer tax that were restricted to first-time buyers, this exemption is available to all purchasers of new homes. The exemption will be available for transfers registered on or after February 17, 2016.
The purchase of land without a home, on which the new owner builds or finishes a home and moves into it within one year, would qualify for a refund of property transfer tax, rather than an exemption at the time of registration.
A purchaser who buys a home and leaves it vacant is not eligible, and the property will not be eligible for the exemption on a subsequent sale.
A new form of property transfer tax return was released as of February 16, 2016, for use to record the new taxes and exemptions and is required to be submitted with the registration of the transfer of title.
COLLECTION OF NEW INFORMATION BY THE PROVINCIAL GOVERNMENT
The Budget proposes changes to the PPTA, which will authorize the British Columbia government to collect new information from owners when they register their property, as follows:
- Individual purchasers will be required to identify themselves as Canadian citizens or permanent residents
- Individual purchasers who are not Canadian citizens or permanent residents will be required to disclose their citizenship
- Corporations will be required to disclose their total number of directors, the directors’ citizenships, and the name, address and citizenship of all foreign directors
- Transferees will be required to disclose whether or not they are holding land as bare trustee when they register and provide information on the settlor and beneficiaries of a bare trust
The date for the above information collection will be set by regulation and the government has indicated it will begin shortly after amendments to the PPTA are in place in order to ensure that the data collection is compliant with other provincial statutes and will allow lawyers and notaries who practice real estate conveyancing to prepare for the new information requirements. The Budget also indicated the data that is collected will be shared with the Canada Revenue Agency under the existing information exchange agreement between British Columbia and Canada.