So let’s talk TAXES… Whether you’re already a homeowner; considering becoming one or just trying to keep up with the Vancouver Real Estate market, you probably have a couple questions or are looking for further clarity. There are a variety of taxes payable, including a few new ones introduced over the past few years.So let’s dive right in and get you updated!
Taxes for Buyers
Property Transfer Tax (PTT)
Plain and simple, you buy or gain an interest that is registered at the Land Title office, you’ll be on the hook for the Property Transfer Tax which is 1% on the first $200,000 and 2% on the portion between $200,000 and $2,000,000. This is where the majority of the PTT falls but there’s also a 3% tax between $2,000,000 and $3,000,000 and a 5% tax on the value greater than $3,000,000. There’s a few full exemptions for first time home buyers (homes priced up to $500,000) and Newly built homes (up to $750,000), so please reach out to our team for more details.
Additional Property Transfer Tax (Foreign Buyers Tax)This additional tax only applies to foreign nationals, foreign corporation or taxable trustees. If you’re purchasing property in or around BC’s major centres including Greater Vancouver, Victoria or Nanaimo on the island or Kelowna in the Central Okanagan, then you need to consider the possibility of paying this additional 20% tax.
When purchasing a brand new home or condo, you’re required to pay the federal good and services tax which equates to 5% of the purchase price.
Taxes for Owners/Sellers
Speculation/ Vacancy Tax
With over 99% of BC residents exempt from paying this tax, you still need to be aware and complete an annual declaration if you are living in one of BC’s major centres or you will face some significant penalties. Canadian Citizens or Permanent residents of Canada will be taxed at 0.5% while foreign owners will be taxed at 2% of assessed value.
Empty Homes Tax
If you reside in the City of Vancouver, you will also need to declare annually whether your home is vacant and subject to the Empty Homes Tax. If it’s vacant, you will be taxed 1% of the assessed value of your home.
Capital Gains Tax
If you’re selling an investment property only 50% of realized capital gains are taxable in Canada at an individual's tax rate. Some exceptions apply, such as selling one's primary residence which may be exempt from taxation. I hope this helps clear the air and provide some clarity on all of the varieties of taxes applicable. Every scenario is different so we would highly recommend reaching out to a Real Estate Accountant when making your next investment decision.
Please don't hesitate to reach to a member of the Wallace Green Real Estate Group for more details.