This is great information to be shared with fellow realtors as we get instructions on what to do for our clients.

As the situation around COVID-19 continues to disrupt people’s lives, we’re actively working to update our online information for professionals and consumers. We encourage you to keep checking our COVID-19 and Real Estate page for new resources and guidance, including external links to resources you may find useful. 
 

RECBC has developed checklists to help you manage challenges related to COVID-19 when working with clients. All real estate professionals should be discussing COVID-19 with their clients to work cooperatively to find solutions that minimize risk for all parties. You can find the checklists, along with advice and considerations for professionals, on our website:

• Sellers Checklist
• Buyers Checklist
• Landlord/Tenant Checklist
• Strata Checklist

If you are working with clients or members of the public who have questions about how their real estate transaction or management services will be impacted by COVID-19, RECBC’s consumer information may be a helpful resource: Information for Real Estate Consumers on COVID-19. 

Service Reminder 
BC has declared a provincial health emergency, and so we encourage you to not visit our office in person at this time. We are continuing to provide all licensing, education, audit, and compliance services. 

We are available to serve real estate professionals and members of the public by phone or email. Do not send anything to our office by mail with the exception of applications containing original Criminal Record Search documents. You can reach us at info@recbc.ca or by phone at 604-683-9664, toll-free 1-877-683-9664.  

Real estate professionals and consumers with questions about how real estate services may be affected by COVID-19, please contact our Professional Standards Advisors at advisor@recbc.ca, or by phone at 604-683-9664, toll-free 1-877-683-9664. 

Download this Home Buyer's App - This app is fantastic and most buyers say it is better than realtor.ca.  Check out the video overview. Access Victoria MLS listingsas soon as they hit the market and find out how close schools are to any home you are interested in.

BC Budget 2018

The British Columbia government made several announcements regarding housing as part of the NDP 2018 Budget. Among those announcements are the following:

Additional Property Transfer Tax (Foreign Buyer Tax):

1. Increase of the Additional Property Transfer Tax on Foreign Entities from 15% to 20%.
2. Expanded regions of the Province where the Additional Property Transfer will apply, to include the Capital Regional District, the Fraser Valley, the Central Okanagan and the Nanaimo Regional District.
   1.                                                     i.     Grandfathering provisions will exempt transactions from the Additional Property Transfer Tax in the above areas if registration occurs before or on May 18, 2018and the property transfer is subject to a written agreement dated on or before February 20, 2018 (a definition of written agreement has not been provided).
   2. Further information on the Additional Property Transfer Tax and other exemptions to the Additional Property Transfer Tax can be found in the following link: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/additional-property-transfer-tax

Property Transfer Tax:

1. The Property Transfer Tax has been increased for residential properties on the portion of the Fair Market Value of the property in excess of $3,000,000.
2. The Property Transfer Tax rate now is:
   1.                                                     i.     1% on the first $200,000,
   2.                                                    ii.     2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
   3.                                                   iii.     3% on the portion of the fair market value greater than $2,000,000, and
   4.                                                  iv.     if the property is residential, 5% on the portion of the fair market value greater than $3,000,000.
   5. This is effective February 21, 2018 and there is no exemption for contracts of purchase and sale entered into prior to February 21, 2018 closing on or after February 21, 2018.
   6. Further information on the Property Transfer Tax can be found in the following link:https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand#FairMarket

Speculation Tax:

1. Beginning fall 2018, the Province has announced that it will introduce a new speculation tax on residential property targeting foreign and domestic owners who own real estate in BC but do not pay taxes in BC. 
2. While full details of this tax have not been released, the Province has announced:
   1.                                                     i.     The new tax will apply to the Metro Vancouver, Fraser Valley, Capital Regional District, Nanaimo Regional District and the municipalities of Kelowna and West Kelowna.
   2.                                                    ii.     Exemptions will be available for most principal residences, qualifying long term rental properties and special cases.
   3.                                                   iii.     The tax rate will be 0.5% of the taxable assessed value of the property for 2018 and 2% for 2019.
   4. Further information on this proposed speculation tax can be found on page 10 in the following link: http://bcbudget.gov.bc.ca/2018/homesbc/2018_Homes_For_BC.pdf.

 General Anti-Avoidance Rules

1. The Property Transfer Tax Act is subject to general anti-avoidance rules and applicable penalties.
   1.                                                  i.     Professional advisors (including Realtors) advising someone to avoid, evade or attempt to avoid or evade tax liability under the Property Transfer Tax Act may result in significant penalties including double the tax, tax plus interest, a fine of $200,000 for corporations or $100,000 for individuals and/or up to two years in prison.
   2. Further information on this can be found in the following link: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/file

This is only a brief discussion of some aspects of certain announcements related to housing in the 2018 Budget. The following is a link to further information on the NDP housing announcements: http://bcbudget.gov.bc.ca/2018/homesbc/2018_Homes_For_BC.pdf. If you have any questions on the above or any other real estate related matter, please do not hesitate to contact our office at any time.

Q - There seems to be some confusion about how GST applies to residential properties that are bought and resold (flipped).  I believe GST does not apply to used residential property unless it is renovated substantially (90 %+). 

I am not clear if it applies to properties that are purchased, not lived in, undergo superficial renovation (such as kitchen and bathroom make-overs), and then sold for a profit.

Does it make a difference if this is done as a one time venture or done multiple times as a business?

A - As always, one starts with the premise of the legislation.  Namely GST is applicable to all sales of real estate unless exempt.  The principal exemption is personal use property.  This means in general real estate used for residential purposes only and not business purposes.  Flipping property on a regular basis could well be construed by CRA as a "business use" and therefore subject to GST.  Flipping a house once would probably not though if the seller specifically set out with a business plan with that in mind it could. 

To avoid difficult situations we recommend buyers put in a clause stating:

“GST is not applicable and if later deemed to be applicable will be deemed included.”

If this is not done and the seller determines GST to be applicable they can charge the buyer GST on the completion date.

If you have any questions please feel free to contact us directly.