Among the many tax changes in the 2018 British Columbia budget are several involving the property transfer tax. Not only has the tax rate changed, but features of the Property Transfer Tax Act are amended to enhance information sharing and streamline administration. Being aware of these changes helps you as a tax professional to protect your clients and ensure their tax returns are properly handled.
Under the new amendments to the Property Transfer Tax Act, additional information is to be collected on property transfer tax returns, with access provided to this information in a multiple listing service database. The limitation period that applies to property transfer tax assessment has been extended to six years, and the general anti-avoidance rule has also been extended, now applying to the entire Act. An administrative penalty for noncompliance with these administrative enhancements also applies.
One of the more significant changes to this tax for your high-net-worth clients is the increase in the tax on the transfer of residential properties valued at more than $3 million. Previously, the property transfer tax rate was 1% on the first $200,000 of the property’s value, 2% on the value between $200,001 and $2 million, and 3% on the fair market value over $3 million. That final number has been upped to 5%. This is a one-time tax collected only when the property is transferred, and it doesn’t affect actual property tax at all.
Other relevant changes to the Property Transfer Tax Act in British Columbia include an increase in the tax rate for transfers of additional property and an expansion of the bankruptcy exemption.