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How the BC Foreign Buyers Tax Affects Your Mortgage Financing

September 24, 2021 | Posted by: Roar Solutions

How the BC Foreign Buyers Tax Affects Your Mortgage Financing

If you know someone who is a potential foreign purchaser and they want to buy property in BC, they should be aware of the BC Foreign Buyers Tax.  This tax can cost a foreign purchaser several thousands, depending on which areas they are looking to purchase in BC.

The BC Foreign Buyers Tax

The BC Foreign Buyers Tax is an additional 20% tax added to the regular Property Transfer Tax when a foreign citizen or non-permanent resident of Canada purchases a residential property in the districts listed below.  Because municipalities and electoral areas may change boundaries at any time, this list is for your convenience only:

Who does the BC Foreign Buyers Tax apply to?

If you're a foreign nationalforeign corporation or taxable trustee, you must pay the additional property transfer tax on your proportionate share of a residential property's fair market value if the property is within specified areas of B.C. 

How Much is the BC Foreign Buyers Tax?

Your proportionate share is the percentage of interest that you're registering on title with the Land Title Office. For example, if you're a foreign entity (foreign national or foreign corporation) acquiring a 70% interest in a property, you pay the additional property transfer tax on 70% of the residential property's fair market value.

Why Was the BC Foreign Buyers Tax Introduced?

The law was introduced after public pressure urged the British Columbia provincial government to intervene in the housing market. Foreign investments were considered to be a major contributor to the rapid rise in home prices. This tax is part of Bill 28, Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act 2016.

This tax (initially for an additional 15% property transfer tax in metro Vancouver) was the Government’s attempt to counter the rise in property prices and reverse the housing crisis in Vancouver. 

In 2018, the tax increased to 20% and extended to the Fraser Valley, Capital Regional District, Nanaimo, and Central Okanagan Regional Districts.

Refunds and Exemptions for the BC Foreign Buyers Tax

You may be eligible for a refund on the tax if you became a permanent resident or Canadian citizen within one year of the date the property transfer was registered with the Land Title Office.

The Provincial Government of BC website provides up-to-date information on claiming an exemption and refund. Full details of the BC Foreign Buyers Tax also known as the Additional Property Transfer Tax are available there. The tax and various requirements may be subject to change, so check the official site for the latest updates.

BC Homebuyer and the BC Foreign Tax calculator:

Click here to calculate and discover what the potential taxes may be.

Knowledge is Confidence:

Now that you know everything there is to know about the BC Foreign Tax, you can enter the market with confidence or you can provide this information to a foreign individual/entity which will prepare them and give them the knowledge and confidence of what to expect when purchasing a property in BC.

 

For all your mortgage related questions, contact Julie Stewart-Boyle, 250-668-4420, julie@jsbmortgages.com

Your mortgage consultant, mortgage broker, mortgage professional, mortgage expert, yes, you get the idea!

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