So you want to buy a house or a condo while you are on a work permit?
Do not do it… unless you want to pay 20% more!
Until 2 years ago, there was never a problem for foreign nationals who wanted to buy a home here on the West Coast of Canada. Even if you were a visitor, a worker or a student, you could buy a home without worrying about paying an excessive tax. Granted, you would have to pay capital gains tax if you were still in temporary status, but that was only if you also made money in a rising housing market.
But there were never any prohibitive taxes and we had many Americans coming to Canada to purchase second homes. The dollar was inexpensive and there was a political reason for moving during the Bush years. However, with the recession of 2008, Americans purchasing real estate dropped off, but it was quickly substituted by new wealth flowing from South Asia. With Chinese economic power on the ascendancy, Vancouver and the west coast of Canada, continued the upward momentum of skyrocketing real estate pricing.
It was not until 2017, with public furor of locals who were being priced out of their homes that the British Columbia government decided to take effective action and place an onerous task on foreign nationals. Foreign nationals (as defined by the BC taxation department) were anyone other than permanent residents or Canadian citizens. The BC government slapped a tax of 15 % initially in 2017 on those foreign nationals who had decided that Vancouver was the most desirable of cities to inhabit. In February 2018, that tax rose to 20% and expanded to other regions of BC.
That one-time tax fee was especially hard-hitting where average home prices in Vancouver hit well in excess of two million dollars. The only exemption the government made was for permanent residents or Canadian citizens. However there was one immigration category they exempted—if you were a nominee under a provincial program called the BC PNP (Provincial Nominee Program). If you were a nominee and you had purchased after March 31, 2017 and you had already paid the tax, you had 18 months following your purchase to claim a refund.
In conclusion, only those foreign nationals who are provincial nominees and are intending on living in the home as their principal residence will be exempt from paying the foreign entity tax and the exemption can only be used once and is not available for companies or taxable trustees.
It is not available for foreign nationals who are applying for permanent residency under any other programs. So the vast majority foreign nationals including those on work permits, student permit or visitors will be required to pay the tax.
In conclusion, wait until you have your permanent resident status before purchasing if you want to buy your home at a 20% discount!
