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British Columbia’s New Budget and its Effect on Real Estate
Important news has come out of British Columbia, and it could affect you if you already own property in the area or are thinking about buying or selling your home. According to lawmakers, the intent behind the new taxes and budget is to slow down the influx of capital from foreign investors who don’t live in the properties they purchase, and to also make properties in B.C. more affordable for everyone.
The government released a 30-point housing strategy with a focus to build affordable housing, curb tax fraud, and increase protections for renters. The changes extend beyond metro Vancouver to other urban centres of B.C. as well. In theory, the new fiscal plan will allow more people to get into the housing market as the measures are designed to let the market level out and make housing more affordable for all. Two of the main points of this new fiscal plan are taxes and affordable housing:
This applies to residential properties, specifically foreign and domestic homeowners who don’t pay income tax in B.C. (including those who leave homes vacant but hold onto the property as investment). This tax will apply to metro Vancouver, Fraser Valley, Capital, and Nanaimo Regional districts and in the municipalities of Kelowna and West Kelowna.
Foreign Buyers Tax
Effective immediately, the foreign buyer tax will increase from 15% to 20% and it will be extended to the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts.
Property Transfer Tax
Effective immediately, the Property Transfer Tax on residential properties above $3 million will increase from 3% to 5%.
Provincial School Tax
Beginning in 2019, the provincial school tax will increase on most residential properties valued at $3 million or more.
British Columbia will invest $6 billion in affordable housing to create 114,000 homes over the next 10 years. They will also enhance local government capacity to build and retain affordable housing by increasing the budget for the Residential Tenancy Branch, so they will be able to improve service and deal with disputes more quickly, as well as strengthen the Residential Tenancy Act for renters.
The new budget will affect real estate in the area today into the foreseeable future, and perhaps for years to come.