The long awaited budget by the new NDP government has lived up to its promise by aggressively addressing BC’s urban real estate market. This budget is aimed at cooling speculation, dropping house prices and taxing wealthy offshore buyers.
However, there is no way to see how these measures will affect the market in the long run, as according to the Finance Minister, Carol James, “we are treading on new ground.”
Here are the main aspects of the Budget:
An Increase in the Foreign Buyers tax rate
This tax, formerly introduced by the Liberal government one and a half years ago, will be increased from 15% to 20% effective immediately. The catchment area will also be increased beyond the Metro Vancouver area, into the Fraser Valley, areas of Vancouver Island and out to the Central Okanagan.
A Speculation Tax has been introduced covering the same areas as the Foreign Buyers tax. It takes aim at people who own empty homes but pay no income taxes in BC. The tax rate will be 0.5% on the property’s assessed value in 2018, and then increased to 2% in the subsequent years. This tax is expected to apply to around 15,000 residential properties.
Increased taxes and compliance on luxury homes
Homes valued at over $3 million will pay a higher property transfer tax of 5% (up from 3%). The government has also promised to close the loopholes such as hidden ownership that have been used by owners of the luxury homes to evade paying taxes.
Investing billions into affordable housing
The government has presented a 10 year, 30 point plan, setting aside almost $6.2 billion over 10 years to create 33,700 housing units. This huge commitment into homes and housing support over the next 10 years is to be shared by every corner of the province. Out of this amount, the government is promising $445 million over 3 years to build thousands of units for middle class families.
Using this budget, the new government’s plan is to stabilize the housing market and allow more people to get into the housing market.
Real estate in Metro Vancouver has proved to be a solid longterm investment. There has never been a better time to buy a luxury property than the present. If you need any advice on real estate transactions, our experienced real estate professionals are available to assist you. You can call us on 604 695 1000 /604 913 1000 or contact us by email.