Property Taxes in BC



Property taxes in BC
courtesy of minneapolisfed.org

In British Columbia you can expect property and home ownership taxes to be extraordinary, since housing inequality is an accute phenomenon here on the West Coast. From basic property taxes, to Property Transfer tax when you purchase a home, or GST on new builds, you can also expect additional taxes for luxury homes over $3 million, taxes for foreign home buyers and taxes on any homes that are left vacant in BC. In this segment, I include links for broader reading and a breakdown of each tax. 


a) Property Taxes
Property Tax is charged based on the municipality tax rates and its classification that your homes is regulated in and is charged on the BC assessment values. 
The assessment and classifications is described by the BC ASSESSMENT ACT  & PRESCRIBED CLASSES OF PROPERTY REGULATION

Notice of Assessments come out in January of each year...you can view you BC Property Assessment here. 


Use of a Home Owners Grant

The home owners grant reduces the amount of property tax you pay for your principal residence. The grant is available to homeowners that pay property taxes to a municipality or to the province if they live in a rural area.

Most eligible property owners qualify for the regular grant (also called the basic grant). 

On top of the regular grant, you may qualify for an additional grant if you are:

To Qualify for the Grant: You must

NOTE:
You can apply for a Property Tax Deferment - is a low interest loan program that helps qualified B.C. homeowners pay their annual property taxes on their principal residence. Eligibility requirement and qualifications for the deferment are for those home owners that are unable to pay their property tax. 


NOTE:
for Corporations and Indirect Ownership:

Land Owner Transparency Registry first of its kind in Canada, LOTR is a publicly searchable registry of information about beneficial ownership of land in British Columbia. Beneficial land owners are people who own or control land indirectly, such as through a corporation, partnership or trust. The registry is intended to end hidden ownership of land in B.C. Pre-existing reporting bodies must register by November 30 2022. 

If you own land for the benefit of a corporation, a trust or legal partnership, you must check if you need to file with the Land Owner Transparency Registry. Pre-existing reporting bodies who are required to file must do so before November 30, 2022.



b) Additional School Tax on High Valued Properties

Starting in 2019, an additional school tax has been applied to residential properties valued at $3 million or more.  The additional tax rate is:

  • 0.2% on the residential portion assessed between $3 million and $4 million
  • 0.4% tax rate on the residential portion assessed over $4 million
School tax rates are disclosed and is one of the services your are charged on your annual property tax notice and municipality rates. 



c) Property Transfer Tax

This is a transfer tax that all Buyers will pay for a property that they have purchased and is due upon closing. 
For example, if a residential property is sold for $4 million, the property transfer tax will be:
    - 1% on the first $200,000 
    - 2% on the portion of the fair market value greater than $200,000 and up to and including $2 million 
    - 3% on the portion of the fair market value greater than $2 million 
   
If the property is over $3 million, there is a further 2% tax applied to the property. 

a) First Time Home Buyers 
b) New Home Builds



d) Additional Property Tax


1)Foreign Buyer Tax

A foreign national, foreign corporation or taxable trustee must pay additional property transfer tax on a 3 types of residential properties property transfer if the property is within specified areas of BC. 

The tax rate is 15% of fair market value if registered on or before February 20, 2018
The tax rate is 20% of the fair market value for property transfers registered on or after February 21, 2018 and if
- Greater Vancouver Regional District (GVRD),
- Capital Regional District,
- Fraser Valley Regional District,
- Regional District of Central Okanagan, or
- Regional District of Nanaimo

2)BC Spéculation & Vacancy Tax

The speculation and vacancy tax is an annual tax based on how owners use residential properties in major urban areas in B.C.
Your home must be declared by March 31st of each year. If a property has more than one owner, a separate declaration must be made for each owner, even if the other owner is your spouse or relative.  
Because this tax is based on how each owner uses the property and whether they have foreign income, we need each owner on title to declare separately. 

For 2019 and subsequent years, the tax rate is:
  • 2% for foreign owners and satellite families
  • 0.5% for Canadian citizens or permanent residents of Canada who are not members of a satellite family
The speculation and vacancy tax applies based on ownership as of December 31st of each year.


TAX EXEMPTIONS:

Section 23 of the Assessment Act and B.C. Reg. 411/95, the Classification of Land as a Farm Regulation (the “Farm Class Regulation”), set out the requirements that must be met for land to be classified as farm for assessment and tax purposes. Together, section 23 of the Assessment Act and the Farm Class Regulation will be referred to as “Farm Class Legislation”. 

Farm Status
In municipalities, the tax exemption for farm buildings other than farmer's dwellings, is $50,000 or 87.5% of the total assessed value of farm buildings, whichever is greater.This exemption also applies for school tax purposes.
All farm buildings in a rural taxation area, including farmer's dwellings, will be entirely exempt from general provincial tax. Farmer's dwellings will remain taxable for school purposes, but the school tax exemption for farm buildings other than farmer's dwellings will be capped at the greater of $50,000 or 87.5% of the buildings assessed value.For example, in a municipality, farm buildings assessed at $500,000 will only be taxed on $62,500. A farmer’s dwelling in a municipality is fully taxable.
In a rural taxation area, farm buildings assessed at $100,000 will only be taxed for school purposes on $12,500. A farmer’s dwelling in a rural taxation area will be fully taxable for school purposes.

Other links:

Agricultural Land Reserve

Land within the Agricultural Land Reserve (ALR) receives a 50% value exemption for school and hospital taxes but is fully taxable for provincial rural tax. Any buildings are assessable and taxable for all purposes at the tax rates for the applicable property class.To estimate property taxes for ALR land, follow these steps:
  1. Enter the total land and building value in the calculator and select the provincial rural tax rate from the tax rate table. Calculate and note the resulting tax amount.
  2. Enter 50% of the land assessment for school/local services taxes, together with the building values. Select the appropriate school and local service tax rates from the tax rate table. Note the resulting amount.
Combine the two calculated tax amounts to get the total tax estimate.