During the past several years, public concern has increased in the Greater Vancouver Regional District (the “GVRD”) over the steep rise in home prices. For many residents of the GVRD, owning a home has become beyond their reach. The affordability and availability of rental units is also becoming increasingly problematic in the GVRD. The situation in Vancouver has repeatedly been referred to as a “crisis” and a “threat” to the region’s economy.1 This has led to political pressure on the British Columbia government to intervene to make home ownership more affordable and to increase the supply of rental units.
In response to these public concerns, the government surprised the market by proposing an additional tax to be paid by foreign buyers of residential real estate in the GVRD. Draft legislation was just released, and already the Legislative Assembly of British Columbia is working to pass it into law effective as of August 2, 2016.
If the legislation, currently set out in Bill 28 – 2016: Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016 (“Bill 28”), is passed into law, it will amend the Property Transfer Tax Act (British Columbia) (the “Property Transfer Tax Act”) to impose an additional 15% tax on foreign buyers of residential real estate in the GVRD. At the moment, there is no relief planned for buyers who have already signed a purchase and sale agreement, so this new tax will have a significant and immediate impact on real estate transactions.
The shortage of rental units in Vancouver is thought to arise partly from foreign buyers acquiring houses and then leaving them vacant. In order to discourage this, Bill 28 also proposes to amend the Vancouver Charter to allow the Council of the City of Vancouver to impose a new tax on residential property that is vacant and not otherwise exempt from taxation under the Vancouver Charter.
Our answers to some of the most frequently asked questions on the new property transfer tax are set out below. Unless otherwise stated, all section references are to the Property Transfer Tax Act resulting from Bill 28.
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This article was written with assistance from summer student Anita Yuk.