Buying a BC Home Through a Company or Corporation

Some buyers wonder whether a company should hold the home, perhaps for liability, family planning or investment reasons. In British Columbia, that choice can change the taxes you pay, the filings you must make and how a lender treats you.

This article covers the main consequences: property transfer tax, federal rules, other taxes, transparency filings and financing. Whether a company makes sense depends on your facts, so an accountant and lawyer should confirm before you decide.

This article covers the law of British Columbia.

Who counts as foreign

A company is not automatically treated as local just because it is registered in Canada. For property transfer tax, a foreign corporation is a corporation not incorporated in Canada, or a Canadian corporation controlled by foreign entities, unless its shares are listed on a Canadian stock exchange. A taxable trustee is a trustee of a trust with a foreign-entity trustee, or a foreign beneficiary holding a beneficial interest in the residential property.

Federal law uses its own definition. A non-Canadian includes a corporation incorporated otherwise than under the laws of Canada or a province, and certain Canadian-incorporated corporations controlled by a non-Canadian.

Property transfer tax

Base property transfer tax is 1% of fair market value up to $200,000, 2% on the portion over $200,000 up to $2,000,000, and 3% on the portion over $2,000,000. A further 2% applies to residential value above $3,000,000. Some transfers are exempt from ordinary property transfer tax, but they can still attract the additional tax when a foreign entity or taxable trustee is the transferee.

On top of that, the additional tax is 20% of the fair market value of the buyer's proportionate share of the residential portion of property in a specified area, and it applies to foreign nationals, foreign corporations and taxable trustees.

A registered owner is treated as the legal and beneficial owner for tax calculation even if the person holds the land in trust. The administrator can also apply an anti-avoidance rule and determine tax consequences in a way that is reasonable in the circumstances to deny a tax benefit. Structures built mainly to avoid tax can therefore be challenged.

Federal rules and other taxes

Federal law bars a non-Canadian from purchasing residential property, directly or indirectly. The ban was announced to be extended to January 1, 2027, so confirm its current status before you buy. Exceptions exist, including for property outside census metropolitan areas and census agglomerations. A non-Canadian who breaks the ban, or anyone who knowingly helps, faces a fine of up to $10,000 on summary conviction. After a conviction under section 4, the Supreme Court of British Columbia may, on the Minister's application, order the property sold on terms it considers appropriate.

The federal Underused Housing Tax no longer requires a return or payment for 2025 and later calendar years. Returns and payment still apply for 2022, 2023 and 2024. The minimum late-filing penalty for those years is $1,000 for individuals and $2,000 for corporations.

BC's speculation and vacancy tax is a separate matter. Owners in taxable areas must declare by March 31 each year, even if nothing has changed. Owners who qualify for an exemption, such as a principal residence, may avoid the tax. Ask an accountant how it applies to a home held in a company.

Transparency filings

Under the Land Owner Transparency Act, a transferee applying to register an interest in land by a transfer of fee simple, a transmission to a personal representative or a transmission to a surviving joint tenant must file a transparency declaration. A transparency report is required only if the future registered owner is a reporting body, meaning a corporation, a trustee of a relevant trust or a partner of a relevant partnership. No declaration is needed for treaty land, self-governing First Nation land or reserve land, where a Declaration of Exclusion from the Land Owner Transparency Act is filed with the application instead.

Registry data is publicly searchable free of charge and shows the reporting body and the individuals named as interest holders or settlors, but not date of birth, SIN or home address.

Penalties can be serious. A Category 1 penalty, for example for leaving required information out or giving false or misleading information, is up to the greater of $25,000 for individuals or $50,000 for others, or 5% of the property's assessed value. An unpaid penalty could result in a lien on the property. An officer may use discretion for people working in good faith to meet the requirements.

Financing and next steps

How a lender treats a company purchase depends on the lender and your situation, so it is worth confirming with them. Raise it with your lender before you make an offer.

• Ask an accountant whether a company really saves you anything after the taxes above.
• Check whether the company would count as a foreign corporation for tax and federal purposes.
• Confirm the property's location against the specified areas and the federal ban's geographic limits.
• Ask the lender early what it requires from a company borrower.
• Plan the transparency report and who the individuals named will be.
• Have a lawyer review the purchase and the corporate structure before you sign.

Frequently asked questions