This week, the Government of British Columbia announced its 2018 budget, and in conjunction, a 30-point housing strategy to address affordable housing in this province.
So, what does this mean to the Sunshine Coast real estate market? To be truthful, it’s too soon to tell, but we do know many of these changes do not currently impact properties on The Coast.
The major changes centre around three key areas: expanding the foreign buyers’ tax to areas outside of Metro Vancouver, increasing property transfer taxes, and implementing a new speculation tax. In total, this announcement will create $1.3 billion taxes, just from housing.
Foreign Buyers’ Tax Increase and Expansion
Effective Feb. 21,The BC government has increased the foreign buyers’ tax to 20% from 15%. Additionally, they’ve expanded beyond the Metro Vancouver area to the following regions: Central Okanagan, Nanaimo, Greater Victoria, and the Fraser Valley. The Sunshine Coast, Sea to Sky regions and other areas in the province were not included in this foreign buyers tax expansion.
Property Transfer And School Taxes Hike
Also effective this week, property transfer tax increased to five percent from three per cent for properties valued at more than $3 million. Even deals that were in the process of closing as of this implementation date were impacted by the tax hike, provincewide. School taxes on these properties will also increase. Find more info on the property transfer tax at gov.bc.ca/propertytransfertax.
New Speculation Tax
The BC Government has also implemented a new levy, coined a “speculation tax”, for those who own homes in the province, but don’t pay income taxes here and leave their homes vacant without renting them out. The target areas are Metro Vancouver, Fraser Valley, Nanaimo and Greater Victoria, Kelowna and West Kelowna. This is expected to impact about 15,000 residential properties.
In 2018, the tax will be 0.5% of taxable assessed value, and will then increase to 2% thereafter. For a home valued at $2 million, this would equate to an annual tax of $40,000.
There are exemptions for those who use this property as their primary residence or for those properties that are long-term rental units. The verdict is still out on how this might impact Canadians who own vacation property in BC or those who rent out vacation homes.
While there were no clear measures in the budget, the government also indicated they were looking closely at the Agricultural Land reserve (ALR) to close loopholes that would ensure land is being used for farming and not investment or luxury properties.
If you have more questions about how the BC budget impacts your property or buying power, get in touch! I’ll be more than happy to connect you with my network of experts who can help. To learn more about the housing announcements listed in the BC Budget visit: bcbudget.ca