Property Transfer Tax Rate on the Value of Residential Properties Above $3 million Increased
Effective February 21, 2018, a further tax rate of 2% is applied to the fair market value of the residential component of a taxable transaction that exceeds a threshold of $3 million. The total rate of tax on the part of the residential component above the threshold is 5%, which is made up of the existing 3% rate on the fair market value of taxable transactions above $2 million plus the new 2% rate on the portion of the fair market value of the residential component above $3 million.
Additional Property Transfer Tax Rate for Foreign Purchasers Increased and Area Expanded
Effective February 21, 2018, the additional property transfer tax rate for foreign purchasers is increased from 15% to 20%. Furthermore, the tax is expanded to the Capital Regional District, the Regional District of Okanagan, the Fraser Valley Regional District and the Regional District of Nanaimo. Transitional rules apply to these new areas that may exempt eligible property transactions entered into prior to February 21, 2018.
Transfers of Principal Residences Exempted in Certain Bankruptcy Cases
Effective for transactions that occur on or after February 21, 2018, transfers of a bankrupt's principal residence from a trustee in bankruptcy to the bankrupt or the bankrupt's spouse or former spouse are exempt from Property Transfer Tax. Prior to this new rule, such transactions were only exempt if no consideration was exchanged.
Other Property Transfer Tax Measures
The Property Transfer Tax Act is amended to enhance administration and information sharing.
- The limitation period for property transfer tax assessments is extended to six years;
- Additional information is collected on property transfer tax returns, including tax identification numbers for those using bare trusts;
- An administrative monetary penalty for non-compliance is introduced;
- The general anti-avoidance rule is extended to the entire Act; and
- Access for tax administrators to additional information on property transactions, including information in a multiple listing service database, is enabled.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.