BC government passes foreign buyer tax; ignores calls to exempt signed contracts

REBGV
other

The BC legislature passed legislation last night that institutes the foreign buyer tax. The legislation will take effect August 2, adding a 15 per cent surcharge to the Property Transfer Tax (PTT) for non-Canadian buyers.

The tax applies at the point of registration at the Land Title Office, regardless of when the contract was signed.

We issued this statement from REBGV President Dan Morrison to our media contacts this morning:

“"Hundreds of British Columbians head into the BC Day long weekend facing stress and uncertainty concerning the largest financial transaction of their lives because of the provincial government's abrupt intervention into the Metro Vancouver housing market this week.

“The Premier’s decision not to exempt transactions where home sellers have an accepted contract in place, with a non-Canadian buyer, that will not close before August 2 is needlessly causing real harm to real people. Our members are scrambling to try and help people understand how their personal and financial situations have been impacted.  

"While it’s the government’s prerogative to implement taxes, people deserve to be treated fairly. They have a right to understand the cost they’re expected to pay when they enter into a legal agreement.”

Since the government’s announcement on Monday, we’ve taken action on a variety of fronts. Here’s a summary:

• We initiated a letter-writing campaign on Tuesday urging members to send our letter template to their elected representatives in Victoria. We've heard from numerous members who've sent it. We adjusted the language in the template to reflect the passing of the legislation. Here's the latest letter template. We encourage you to continue to write to your MLAs and the Premier this weekend.
• We issued our own letter directly to the Premier  earlier this week to express our concerns and reached out to like-minded stakeholders to learn their positions on this issue. The Urban Development Institute and Greater Vancouver Homebuilders Association have publicly aligned with our position, and have been quoted in the media objecting to government's decision to not grandfather pre-existing contracts.
• We issued this statement to the media shortly after the announcement. Since then, REBGV President Dan Morrison has conducted more than 35 interviews with major national and international media outlets, including Global TV, CTV, CKNW, Fairchild Radio, CBC, Vancouver Sun, Roundhouse Radio, CNN, Canadian Press, News 1130, the Financial Post, and more.

Here are some examples of the coverage (click on the links to view):

• Vancouver Sun – Front page article on July 27: Condo ‘presales’ could be left in chaos by new BC tax, industry warns
• CTV News – Scott Laurie interviews Dan Morrison
• Global TV - Some concerned about BC's new foreign buyer tax
• CKNW – Greater Vancouver Real Estate Board slams foreign buyer tax
• Roundhouse Radio – Kirk LaPointe interviews Dan Morrison 
• Business in Vancouver – Industry critical of new BC tax on foreigners buying homes
• CKNW – Lynda Steele & Drex interview Dan Morrison 
• CTV - Home builders, real estate board says new BC property tax hurts province

Standard forms update in progress

BCREA has worked with legal counsel to prepare a clause for you to use when drafting contracts involving foreign nationals that complete on or after August 2. They’ve asked the Real Estate Council of BC to include it in the clauses and phrases on WEBForms®.

The clause is:

Buyers are Foreign Entities

The Buyer is and will be, on the Completion Date, a "foreign entity" or a "taxable trustee" as defined in the British Columbia Property Transfer Tax Act (as amended) ( collectively, the "Foreign Entity"). The Buyer is aware that the Property Transfer Tax Act, as amended, imposes an additional Property Transfer Tax of 15% of the fair market value of any residential property being purchased by a Foreign Entity. The Buyer will thus be required to pay Property Transfer Tax equal to the total of:

1. 1% of the Purchase Price on the first $200,000;
2. 2% of the Purchase Price that exceeds $200,000 but does not exceed $2,000,000;
3. 3% of the Purchase Price that exceeds $2,000,000; plus
4. an additional Property Transfer Tax equal to 15% of the Purchase Price.

The Buyer has obtained or will obtain independent legal advice with respect to the payment of Property Transfer Tax.

We’ll continue to send you updates on our work to represent you and your clients with the government and in the media.

copyright© real estate board of greater vancouver