The Additional Property Transfer Tax (“ATT”), commonly called the Foreign Buyers Tax, was introduced by the BC government in 2016. The ATT is 20% of the fair market value of the property and is payable when a foreign individual (an individual who is not a permanent resident or a citizen of Canada) buys property in certain specified areas in BC, including Greater Victoria, Greater Vancouver, Nanaimo and Kelowna. There are two exceptions to paying ATT for recent immigrants to BC.
First exception is for BC Provincial Nominees who hold a valid provincial nomination for a permanent residence application to Canada at the time of purchasing the property. The eligibility requirements for this exemption are as follows:
- The purchaser holds a valid BC Provincial nomination on the completion date for the property purchase.
- The property will be the purchaser’s principal residence.
- The exemption can be claimed only once.
The second exception is a refund of the ATT for individuals who become Canadian permanent residents or citizens within 1 year of purchasing property in BC. The eligibility requirements for the refund are as follows:
- The purchaser used the property as their principal residence;
- moved into the property within 92 days of the completion date; and
- continued to live in the property as their principal residence for at least one full year after the completion date.
- This refund can be claimed only once.
- The purchaser must apply for the refund between 12 months and 18 months after the completion date.
The first exemption for BC PNP nominees applies only to the person holding the provincial nomination. If a nominee and the nominee’s spouse want to purchase property jointly, the nominee’s portion of the ATT is exempt, but the other spouse must pay their portion of the ATT. If the other spouse becomes a permanent resident within 1 year of the completion date, that person can apply for the refund under the second exception.
The BC government defines “principal residence” for the purposes of ATT as follows[1]:
A principal residence is the usual place that a person makes their home.
If a person owns more than one home, they can’t designate which one is their principal residence. Their principal residence is where they live and conduct their daily affairs, like paying bills and receiving mail, and it’s generally the residence used in government records for things like income tax, Medical Services Plan, driver’s licence and vehicle registration.
This is a broad overview of the Foreign Buyers Tax. Other eligibility requirements and timing issues may be applicable to different individuals depending on their circumstances. Please seek professional advice with respect to your specific circumstances regarding ATT.
[1] https://www2.gov.bc.ca/gov/content/taxes/property-taxes/glossary-faq/glossary#principal-residence
