The NDP government has a 30-point budget plan that brings in a speculation tax, raises the foreign buyers’ tax and pledges to close loopholes that raise costs for B.C. residents.
Finance Minister Carol James introduced a much-anticipated speculation tax, to be put into place by fall 2018.
“It will tax foreign and domestic speculators and the tax will apply to property owners who don’t pay taxes in our province, including those who leave their units vacant,” said James. “This tax will penalize people who’ve been parking their capital on our housing market simply to speculate, driving up prices and removing rental stock.”
The tax will start at 0.5 per cent and rise to the two per cent rate this year as promised. It’s estimated to bring in $87 million in its first year, $13 million shy of the $100 million promised during the election.
It’s being extended beyond Metro Vancouver to the Fraser Valley, the Capital Regional District, the Nanaimo Regional District, Kelowna and West Kelowna.
Most principal residences will be exempt, as will qualifying long-term rental properties. Those who don’t qualify for the up-front exemption will be able to apply for an income tax credit for those who pay taxes in B.C.
Raising the foreign buyers tax
The NDP budget called the 15-per-cent foreign buyers tax in Metro Vancouver “insufficient” and immediately raises it to 20 per cent in Metro Vancouver and expanding it other urban areas.
“We think that foreign buyers should contribute more for the quality of life they enjoy living in our province,” said James.
What’s not included in this budget update is the BC Greens’ desired ban on foreign ownership altogether.
The property transfer tax and school tax rate are both going up for properties worth more than $3 million. The transfer tax will go up from three to five per cent.
The province will bring in a registry to crack down on hidden ownership, where the name, or numbered company, on the land title is not the one benefiting from the property, as well as require developers to collect more information during condo pre-sales to make sure that required taxes are paid.
Addressing criticisms heard in Richmond, Delta and throughout the Capital Regional District, the province said it would look to review tax policies for homes built on ALR land to ensure the land is used for farming first.
The NDP are nixing the BC Home Owner Mortgage and Equity Partnership program in April, which gave first-time homebuyers loans of up to $37,500 or five per cent of the purchase price for homes under $750,000.
Brought in by the former Liberal government, the program was meant to bring more people into the housing market and spur development of entry-level homes.
However, the NDP said the program “has helped far fewer first-time home buyers than originally projected and had a minimal impact on housing affordability.”