The waters of BC may be crystal clear, but the tides of change sweeping the real estate market for foreign buyers have been anything but. With new regulations and changes continuing to take effect, many foreign buyers in Vancouver are still unclear about what it all means. So if you’re a foreign buyer in Vancouver, here’s what you need to know.
Here’s what happened so far in 2017:
BC PROVINCIAL NOMINEE PROGRAM WORKERS EXEMPT FROM 15% TAX
The additional 15% foreign buyer tax for foreign nationals purchasing a home in the GVA remains. However, the BC government has now announced that this tax no longer applies to foreign nationals who receive confirmation under the BC Provincial Nominee Program. Not sure what that is? You are not alone.
The BC Provincial Nominee Program (BC PNP) is a provincial program designed to woo skilled and qualified workers to the BC labour market; those who qualify can then go on to gain permanent residency in BC. Hopeful immigrants to BC who have the highest scores in 1 of 6 official categories including ‘skilled worker,’ ‘international graduate,’ and ‘entrepreneur immigration,’ are invited to apply to the BC PNP by the government, and, if chosen, subsequently nominated for residency. How many people are invited depends on what the federal government allocates for any given year, as well as economic factors influencing the local job market. For the 2017 calendar year, the government has allocated a total of 6,000 applications.
To qualify for the program, and therefore not be required to pay the extra 15% foreign buyer tax, the buyer must meet the following criteria:
- The buyer must be a confirmed BC Provincial Nominee before the title of the home changes hands.
- The property must be used as a principal residence.
- The nominee must only claim this exemption once.
- If a foreign national decides to purchase a second property, they will not be exempt from the 15% foreign buyer tax.
In addition to foreign nationals who are exempt from the 15% foreign buyer tax, refunds may be available for those who paid the foreign buyer tax as long as specific criteria is met.
If you meet the following, this might include you:
- If you bought a home and paid the additional property transfer tax between August 1, 2016 and March 17, 2017.
- Have been confirmed as a BC Provincial Nominee.
- Have become a permanent resident of Canada or Canadian citizen within a 1-year period of the transfer date.
PROPERTY TRANSFER TAX CHANGES
Unexpected moves by the BC government have curtailed the amount of property transfer tax (PTT) paid by first-time homebuyers. Under the First-Time Homebuyer’s Program, the property transfer tax exemption has been increased from $475,000 to $500,000. In a speech addressing the 2017 budget, BC Finance Minister Mike de Jong remarked that the program “has helped nearly 5,500 families save an average of $7,600 since it was introduced last year.” The British Columbia Real Estate Association (BCREA) did not welcome this figure however, which has suggested the government extend the exemption threshold to $750,000.
PST & MSP FALL TO THE WAYSIDE
With the province seeing significant increases in the cost of power over the last few years, the liberal government will phase out provincial sales tax (PST) on electricity in 2017. This large-scale change will begin in October 2017 when the PST will be lowered from 7% to 3.5%. This tax will be phased out completely by April of 2019 at a cost of $164 million unrealized capital gains for the province.
Meanwhile, the province is also planning to scrap the Medical Services Plan (MSP) premiums, which will cost BC the head-rolling sum of $1 billion. These changes will be put in place during January 2018, when it is cut in half for families with a net annual income of $120,000 or less. To put this in perspective, an article in Business Vancouver reported that this cut in premiums would translate into a savings of $450 over a 12-month period.
THE TIDES OF CHANGE
While the rules governing BC’s real estate market often appear as mercurial as the tides, foreign buyers remain well positioned to make an investment in the province. Knowing what your options are, as well as what rules have changed and how is imperative before making an educated leap into the tides.