B.C. doubles down on foreign buyers

The previous Liberal government introduced a 15-per-cent tax on homes purchased by foreigners in the Metro Vancouver area in 2016. Sales of detached homes slowed for several months but prices did not fall.

The minority NDP government will increase the tax to 20 per cent and expand it to the Fraser Valley, central Okanagan, the Nanaimo Regional District and the Victoria area.

The changes to the foreign buyers tax take effect on Wednesday.

The speculation tax will be introduced this fall. The new annual property tax will target foreign and domestic homeowners who do not pay income tax in B.C., including those who leave homes vacant. So-called satellite families, or households with high foreign incomes that pay little provincial income tax, will also have to pay the tax.

Principal residences and long-term rentals will generally be exempt, meaning the majority of B.C. homeowners will not pay the tax, James said.

“This is a major important step to end speculation in our market,” she said. “This tax will penalize people who have been parking their capital in our housing market simply to speculate, driving up prices and removing rental stock.”

In 2018, the tax will be $5 per $1,000 of a property’s assessed value. In 2019, the tax rate will rise to $20 per $1,000 of assessed value. It will initially apply to Metro Vancouver, the Fraser Valley, the Victoria area, the Nanaimo Regional District, Kelowna and West Kelowna.

The government says it’s closing real estate loopholes that allow people to skirt tax laws. It’s building a database on pre-sale condo assignments that it will share with tax authorities in an effort to ensure people who sell and resell contract assignments are paying the appropriate taxes.

The plan also addresses supply through what the government says is the largest investment in housing affordability in B.C. history — more than $6 billion over 10 years to deliver 114,000 homes. That includes more than 14,000 rental units for middle-income people, students, and women and children fleeing violence; 1,750 units for Indigenous people and 2,500 homes for the homeless.

Recent statistics from the Real Estate Board of Greater Vancouver show the average price of a detached home was $1.6 million and the average price of an apartment was $665,400. Vacancy rates for renters are at one per cent or lower in most cities across B.C., including Victoria and Kelowna. Attorney General David Eby, left, and Premier John Horgan watch as Finance Minister Carole James delivers the budget speech on Tuesday.