BC's New Real Estate Tax and How will it Affect You.
Tue, Jul 26 2016 at 3:33pm
Yesterday, British Columbia's finance minister Mike De Jong announced new fiscal calming measures aimed at reducing the rate at which real property is appreciating throughout the province, and in particular in the metro Vancouver area. These measures included a 15% foreign ownership tax which is to be assessed on any person who lives outside of Canada and holds foreign citizenship, and a provision for the Vancouver city council to allow for special 'vacancy' taxes on any property that remains vacant for an extended period of time. The foreign tax is to take place on August 2 2016, and applies to properties that were pre-sold prior to this date and the vacancy tax has yet to be rolled out with no specific details released at this time.
Since then, our office has been flooded with calls from prospective and current clients who are curious about the implication on Alberta or more common; the implication for Alberta based investors who own property in BC. Will these easing measures have an effect on Albertan prices? Are the rules nation wide? Will Alberta follow suit? These are reasonable questions and if you are an Alberta real estate investor, then these issues may have a significant financial burden. We understand that there is much confusion in the market right now.
While the BC government?s plan to tax foreign investors has a bearing on rental rates, we believe the impact will be minimal because relatively few of these properties are put into the rental pool in the first place. We believe that the reduced momentum may succeed in driving prices down, especially in the high end markets which could, in a drawn out and somewhat convoluted way translate to the rental market. Ultimately, we believe that rental homes in the affected price point are somewhat sparse to begin with.
The vacant property holding tax is more likely to have a bearing on investors, however the particulars are entirely ambitious at this time because you draft legislation or bylaw has been drafted, for this reason we are unable to comment on the matter.
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