Speculation Tax Update

Happy Cyber Monday,

Thanks for taking a few moments away from your Amazon shopping today!

 

  1. SPECULATION TAX INFO –

The BC government has updated their speculation tax information page (here). The tax amount will be 0.5% of the property’s assessed value in 2018 (this year!) and rise to 2% for foreign families in 2019.  Every person in a taxable area (GVRD, Victoria, Nanaimo, Kelowna and West Kelowna) will need to make a declaration in FEBRUARY 2019 (which must be received back by the Province by MARCH 31, 2019).  There is a large list of exemptions (complete list here) but most homes will be exempted under a) PRINCIPAL RESIDENCE EXEMPTION or c) RENTAL EXEMPTION.  Note for the PRINCIPAL RESIDENCE EXEMPTION you must “reside for a longer period in a calendar year than any other place” and “Couples are generally deemed to have one principal residence for the purposes of the tax”…. Note for many of our Oil patch families there is a Spousal separation for work exemption meaning Spouses who live apart for work reasons may be able to claim a principal residence exemption on an additional home.

 

  1. SPECULATION TAX – What should a Realtor do?

Generally speaking a Realtor needs to keep her client’s informed and point then in a direction to get further advice if required.   Importantly the Speculation and Vacancy Tax Act makes EVERY OWNER who owns a property during a tax year JOINTLY AND SEVERALLY liable to pay the tax!

 

!!NEW CLAUSE RECOMMENDATION!! – For ALL 2018 Closings between JAN and AUGUST:

 

Speculation Tax Exempt (Buyers Agents start your offers with this one)

This property is located in an designated taxable region under the Speculation and Vacancy Tax. The Seller represents and warrants to the Buyer that the property is eligible for an exemption in the prior tax year and the Seller shall provide a declaration on closing that the property is EXEMPT. The parties are advised to seek independent legal advice on the application of the Speculation Tax.

 

OR:

 

Speculation Tax Holdback (Sellers Agents counter with this if Spec Tax payable)

This property is located in an designated taxable region under the Speculation and Vacancy Tax. The Seller represents and warrants to the Buyer that the property is NOT eligible for an exemption in the prior tax year and the Seller solicitor shall undertake to holdback the amount of the tax from the proceeds of sale at closing and pay such amount to Province when due. The parties are advised to seek independent legal advice on the application of the Speculation Tax.

 

 

  1. IN THE NEWS – REAL ESTATE AND MONEY LAUDERING

Global recently published a news story about the prevalence of real estate and money laundering in the Vancouver market (here). This is a great reminder for Realtors on the requirements of the PCMLTFA and the Regulations on brokerages to:  set up a compliance program, keep good records, appropriately identify clients; and report where there is suspicious activity or a large cash transaction (see pg 45 from LU 2017).

 

REFERRALS TO PETER

The best way to make a referral is a telephone call or a joint email attaching the offer between the realtor, the client and myself (peter.borszcz@pihl.ca), these emails get a return call or email as soon as possible in all cases.

 

We do some interesting stuff around here, in addition to residential real estate within OMREB, we work on complex commercial, land assembly, development, native land, and industrial deals all over the Province. If you are outside of board area and are working on something unique, chances are we have done it, please feel free to give us a call (250-762-5434).

 

Have a great week,

Peter.

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