There is a lot of chatter about how foreign buyers are the cause of inflation to the housing market in Vancouver, but after a month of collecting data, the government uncovered that only 5% of home buyers in Vancouver are foreign nationals. This is confirmed by the CMHC’s Housing Market Insights report, consistent with multiple years of research.
Which then had people questioning whether immigration was a factor, but the BCREA was able to accurately estimate the presence of foreign buyers through census, CMHC, and REBGV sources.
Vancouver Foreign Buyers Consistent with Other Canadian Cities
Part of this presence assessment was concluded via the 2011 Census report, which uncovered that Vancouver had pretty much the same foreign occupied or temporary residents in Vancouver as any other large Canadian city.
In addition, information collected also indicated that local residents were 3-4 times more active in purchasing housing that foreign investors, creating a supply of rental accommodations that proportionally met the demand.
It was also noted, that between 2010-2015 apartments actually became more affordable. However, that doesn’t take into account the spike in the value of Vancouver condos in 2016, which leads us to the 2016 Property Transfer Tax Update.
2016 Property Transfer Tax Update
As of July 2016, the BC government changed to PTT to reflect a 15% tax for foreign buyers taking effect August 2. “The Property Transfer Tax (PTT) is a land registration tax paid by a property buyer or owner when a property title is registered at the Land Title and Survey Authority (LTSA).”
Understanding the PTT Terms and Conditions
PTT is based on fair market value of a property, and is charged via a rate of 1% per $200,000, and 2% on the balance up to and including $2,000,000, with 3% PTT being charged on any balance greater than $2,000,000.
However, if the property is exchanged without any dollars attached to it – such as an inheritance – the value will be determined by an independent appraisal or BC Assessment.
Are There PTT Exemptions?
First Time Home Buyers’ Program The First Time Home Buyers’ (FTHB) Program gives a PTT exemption to eligible first time home buyers, but you must be a Canadian citizen or permanent resident to qualify.
Other ways around this tax include:
- Having lived in BC for 12 months consecutively, previous to the purchase of any property
- Having filed at least 2 income tax returns as a resident of BC in the past 6 years
Overall this is good news for everyone involved – especially for those who have been hesitant to purchase real estate in Vancouver due to a misconception of an inflated market.
With the understanding that foreign buyers are not a factor in any sort of inflation, and with the new Property Transfer Tax rules and exemptions offering multiple ways in which to buy and/or save – it all equals good news.
New buyers and previous investors alike – this is a lot to understand, and I am happy to explain it to you in further detail if you are looking to buy in the Vancouver market and be a part of this exciting time!