British Columbia Foreign Buyer Tax: PR and Work Permit Holders

Newcomers often ask the same question before buying: does the foreign buyer tax apply to me if I am on a work permit, or if I have just become a permanent resident? The answer depends on how the law defines a foreign national, and that definition is tied to a federal statute.

This article explains the definition, the Provincial Nominee exemption, and how your status affects other property transfer tax exemptions. Immigration status can be complicated, so a lawyer can confirm how your own documents are treated.

This article covers the law of British Columbia.

How the law defines a foreign national

Under section 2.01 of the Property Transfer Tax Act, a foreign national is an individual who is a foreign national under section 2(1) of the federal Immigration and Refugee Protection Act. The BC definition therefore follows federal immigration law rather than creating its own test.

In practice, your own situation has to be checked against that federal definition. Whether you hold a work permit, a study permit, permanent residency or citizenship, confirm with a lawyer how that status is treated under the federal definition before you rely on an assumption.

The same section reaches beyond individuals. A foreign corporation is one not incorporated in Canada, or a Canadian corporation controlled by foreign entities unless its shares are listed on a Canadian stock exchange, and taxable trustees include trustees of a trust with a foreign-entity trustee or foreign-entity beneficiary.

Where the additional tax applies

The additional property transfer tax is charged on the residential portion of property in the Capital, Fraser Valley, Metro Vancouver, Central Okanagan and Nanaimo regional districts. The ministry states the rate as 20% of the fair market value of the buyer's proportionate share, while the Act refers to 15% unless a different rate is prescribed, so the current rate is worth confirming.

If you buy with others, the tax is based on each foreign national's share, not the full price. Family members are not exempt and pay on their proportionate share if they are also foreign nationals.

The additional tax does not apply to properties on Tsawwassen First Nation treaty lands, and mutual fund trusts, real estate investment trusts and specified investment flow-through trusts are not subject to it. Acquisitions on behalf of a qualifying Canadian-controlled limited partnership, for transfers registered on or after June 1, 2020, are also exempt.

The Provincial Nominee exemption

A confirmed B.C. Provincial Nominee is exempt from the additional tax, but only if the buyer is an individual, the property is a principal residence, and the buyer holds a valid nomination certificate. The exemption can be claimed once.

• Individual buyers only, not companies.
• Principal residence only.
• A valid nomination certificate is required.
• One claim only.
• Family members do not share the exemption automatically.

Why status also matters for other exemptions

Your status affects more than the additional tax. The first time home buyers' exemption requires you to be a Canadian citizen or permanent resident, to have lived in B.C. for at least one year before registration or filed at least two B.C. resident income tax returns in the last six taxation years, and to have never owned a principal residence anywhere in the world. Foreign entities and taxable trustees are not eligible.

The newly built home exemption likewise requires a Canadian citizen or permanent resident, who needs a SIN or proof of permanent residency. A buyer who is not yet a citizen or permanent resident but becomes one within 12 months of registration may apply for a newly built home refund.

What to do next

• Gather your immigration documents, including any nomination certificate.
• Ask a lawyer how your status is treated under the federal definition.
• List everyone going on title and their status, since the tax follows each person's share.
• Check the property's location against the five regional districts.
• Plan for exemptions at registration, because they are claimed on the return.

The buyer pays property transfer tax when applying to register at a land title office and must file a return whether or not the transaction is exempt. The additional tax is filed with that return. Missing, incorrect or misleading information can mean paying the corrected tax plus a penalty equal to the amount correctly paid.

If an eligible exemption was not claimed at registration, a refund can be sought; for the newly built home exemption, you use form FIN 272 after the first anniversary of registration and within 18 months of registration. A qualifying first time home buyer who did not apply at registration can apply for a refund from the first anniversary until 18 months after registration.

Frequently asked questions