The BC Budget 2018 prioritizes making life more affordable, improving the services people count on, and building a strong sustainable economy. It came as no surprise that Housing was in the forefront of the new changes/strategies. In today’s post, let’s discuss how BC Budget 2018 will affect you.
New Speculation Tax
The new speculation tax is an annual property tax targeting foreign and domestic speculators who do not pay income tax in BC. The tax will be 0.5% of the taxable assessed value for 2018 and increased to 2% thereafter. This tax will be applied in Metro Vancouver, Fraser Valley, Nanaimo, Capital Regional District, and the municipalities of Kelowna and West Kelowna.
Property Transfer Tax Increase
Property transfer tax rate on the value of a residential property above $3 million has increased (effective February 21, 2018). The property transfer tax rate is now:
- 1% on the first $200,000
- 2% on the portion of the fair market value between $200,000 and $2,000,000
- 3% on the portion of the fair market value greater than $2,000,000, and
- 2% additionally on the portion of the fair market value greater than $3,000,000 for residential properties
As an example, if you purchased a $4,000,000 home prior to February 21, 2018, you’d be required to pay $98,000 in property transfer taxes. With the new increase, you’d be required to pay $118,000.
Annual Property Tax Increase
School tax will increase for most residential properties where the value of the residential portion exceeds $3,000,000.
Foreign Buyers Tax Increase
The additional property transfer tax levied on foreign buyers will be increased from 15% to 20%. This tax will now be expanded from Metro Vancouver to the Fraser Valley, Central Okanagan and Nanaimo and Capital Regional Districts (effective February 21, 2018).
After watching the technical briefing on the BC Budget 2018, it certainly feels like Finance Minister Carole James and her team has identified speculative investing from international sources as a fundamental problem with housing affordability. Increasing/adding levied taxes definitely could deter oversea buyers from purchasing BC properties but is this really the right strategy? Is foreign purchases/ownership really the issue? There are certainly articles outright stating that foreign buyers aren’t the problem (only account for 5% of the market). What can be done about the wealthy Canadians who are speculatively investing in multiple homes?
What are your thoughts? Please share below.