The Government of British Columbia has announced several new measures aimed at slowing house purchases by foreign buyers and speculators, including an increase to the existing foreign buyers tax and a brand new speculation tax.
Foreigners will now pay the province a 20% tax on top of the listing value, up from 15%, and a new levy on property speculators will be introduced this fall, according to the Government of British Columbia, which outlined the new measures in its 2018 Budget. The provincial government will also crack down on the condo pre-sale market and beneficial ownership to ensure that property flippers, offshore trusts and hidden investors are paying taxes on gains.
Premier John Horgan faces formidable demands after taking power in a fiercely contested election last July. His New Democratic Party made expensive promises to topple the Liberals, whose 16-year-rule brought the fastest growth in Canada, but also surging property values while incomes stagnated.
Public outrage over foreign home buyers and speculators, most of them from Asia, has surged amid perceptions that global capital seeking a stable sanctuary, especially from China, is driving double-digit gains in Vancouver, the country’s most expensive property market. British Columbia Finance Minister Carole James has pledged to make housing more affordable for residents of Canada’s Pacific Coast province.
“Our goal is fairness — fairness for the people who live here, who work here and pay their taxes here,” said Minister James after unveiling a raft of new measures intended to “moderate” the surge in housing prices, which she said has emerged as one of the top concerns of both residents and businesses struggling to recruit workers due to the high cost of living in the City of Vancouver and across much of British Columbia.
The new speculator tax takes effect this fall and will apply to foreign and domestic investors who don’t pay income tax in the province. It will start at 0.5% of the property’s assessed value in 2018 and rise to 2% thereafter. Primary residences and homes leased as long-term rentals will be exempt from the new tax.