The Definitive Guide To Buying Property In Vancouver For Americans with Dual Citizenship
May 23, 2017
Entering The Real Estate Market in the 604 Area Code Is Easier For You
The introduction of the Foreign Buyer’s Tax, or as its also referred to as – the Additional Property Transfer Tax has cooled Vancouver’s red hot real estate market – a bit. On Aug. 2, 2016, the 15-per-cent tax took effect for home purchases in the Metro Vancouver area involving foreigners. It taxes foreign entities or taxable trustees pay in addition to the general property transfer tax on transfers of residential property located in the Greater Vancouver Regional District (GVRD) (also known as the Metro Vancouver Regional District). You can read all about it here.
Here’s the good news: As a Canadian citizen, you don’t have to worry about this
As per the Globe and Mail, the FBT applies to buyers who aren’t Canadian citizens or permanent residents; foreign-registered corporations; and Canadian corporations controlled in whole or in part by foreign nationals or foreign corporations. The tax adds 15% of the purchase price on any real estate. As an example, a $2-million home would be subject to an additional $300,000 in tax.
With that said, you should be made aware of the some of the other tax implications if you’re purchasing property or land in the GVRD. You’re not entirely scott free. As per Mansion Global, here’s the rundown of the other taxes you’ll be up for.
British Columbia land transfer tax. As the buyer, you would be required to pay this tiered tax. The rates (in Canadian dollars) are: 1% of the fair market value of the property on the first C$200,000; 2% on the portion of the value between C$200,000 (US$145,862) and C$2 million ($US1.46 million); and 3% on the portion of the value over C$2 million. Therefore, a property worth C$450,000 (US$328,191) would incur a tax of C$7,000 (US$5,105).
Property taxes. These are assessed every year based on the value and location of your property. For example, in the Metro Vancouver area, 2016 property tax rates were around 0.32% of the taxable value. Property taxes are deductible whether you use the property as a second home or you rent it out
Vacancy tax. This new tax, which went into effect Jan. 1, applies when residential homes in Vancouver (single-family homes, condominiums, apartments, etc.) are occupied for fewer than 180 days per year. The tax is 1% of the property’s value. You can avoid this tax by renting out your apartment for at least six months in a year (in 30-day increments), or if you, a family member or friend live there and use it as a primary residence for at least six months of the year