New tax on foreign buyers

Foreign nationals who buy real estate in Metro Vancouver would pay an additional property transfer tax of 15 per cent under legislation being brought in today by the British Columbia government.

Finance Minister Mike de Jong introduced the tax as part of legislation aimed at addressing low vacancy rates and high real estate prices in southern B.C.

The government says the additional tax will take effect Aug. 2 and will apply to foreign buyers registering the purchase of residential homes in Metro Vancouver, excluding treaty lands in the Tsawwassen First Nation.

De Jong says the additional tax on a $2-million home would amount to $300,000.

He says recent government housing data indicates foreign nationals spent more than $1 billion on B.C. property between June 10 and July 14, with 86 per cent being made on purchases in the Lower Mainland area.

The legislative package would also enable the City of Vancouver to amend its community charter in order to levy a vacancy tax.

The legislation creates new measures to help make home ownership more affordable, establishes a fund for market housing and rental initiatives, strengthens consumer protection, and gives the City of Vancouver the tools it requested to increase rental property supply, the province says.

“Owning a home should be accessible to middle-class families, and those who are in a position to rent should be able to find a suitable home,” Premier Christy Clark said. “These changes are about helping to make sure that British Columbians can continue to live, work and raise their families in our vibrant communities.”

Last May, de Jong said he wasn't in favour of a tax on foreign investment, saying he worried it would send the wrong message to Asia-Pacific investors.

“The data we started collecting earlier this summer is showing that foreign nationals invested more than $1 billion into B.C. property between June 10 and July 14, more than 86 per cent of it in the Lower Mainland,” said de Jong. “While investment from outside Canada is only one factor driving price increases, it represents an additional source of pressure on a market struggling to build enough new homes to keep up. This additional tax on foreign purchases will help manage foreign demand while new homes are built to meet local needs.”

A new Housing Priority Initiatives Fund will be announced in the near future. It will receive an initial investment of $75 million and receive a portion of revenues from the property transfer tax.

The province is also amending the Real Estate Services Act to implement key recommendations of an independent advisory group report, and to end self-regulation of the real estate industry. 

Amendments to the City of Vancouver Charter will also provide legislative authority to implement and administer a tax on vacant homes.