In recent years, LIF has received an increased number of claims against lawyers relating to additional property transfer tax. In these cases, lawyers forgot that a foreign national, foreign corporation or taxable trustee is required to pay additional property transfer tax on certain real estate transactions.
Don’t get caught. In this re-released video, Marlon Song, Claims Counsel at LIF, shares the traps and tips that will help you avoid a claim.
The additional tax applies to the residential portion of a property that BC Assessment has classified as residential (class 1), farm land (that includes a residential improvement) or commercial (that includes a residential improvement).
Also, the Ministry of Finance has asked that we provide you with this reminder:
“If you have clients purchasing residential property in BC who are a foreign national, foreign corporation or taxable trustee you will want to advise them about the additional property transfer tax.
If the property transfer is within the following areas, the tax rate is 20% on the fair market value of the purchasers’ proportionate share:
- Capital Regional District
- Fraser Valley Regional District
- Metro Vancouver Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
It’s important for purchasers to ensure that the proportional ownership interest they register with the Land Title and Survey Authority reflects their financial contribution at purchase. All property transfer transactions are subject to audit.
Note - a Canadian transferee can be assessed as a taxable trustee based on the results of an audit if they declare and register ownership interest that is more than their financial contribution towards the property purchase. In this case they will then be subject to additional transfer tax.
There is an exemption available to confirmed Provincial Nominees, and a refund for those persons becoming a Permanent Resident or Canadian citizen within 1 year of the property transfer date.
Did you know:
An individual confirmed under the Provincial Nominee Program may qualify for an exemption, but it’s important to note that ONLY the individual named on the valid nomination certificate can be exempt. Family members, including a spouse, are not exempt and will have to pay the additional transfer tax on their proportionate share of the property.
The purchaser may be eligible for a refund if they become a permanent resident or Canadian citizen within one year of the property transfer registration date.
It’s important to note that it is an exact one-year time limit. After one year the refund is no longer available – there is no exception.
Specific information and timelines are available on our website at https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/additional-property-transfer-tax”
For the latest updates from LIF, follow us on Twitter @Lifbc.