Laws and Restrictions for International Buyers in Greater Victoria Real EstateThe allure of British Columbia (BC) is undeniable. From the majestic mountains to the scenic coastline and vibrant cities, it’s no wonder that many international buyers are looking to make BC their home. Whether you're attracted to the bustling streets of Downtown Victoria or the peaceful suburbs of Saanich, purchasing a property here is an exciting prospect.However, as a foreign buyer, it’s important to understand the legal landscape and restrictions that may apply to you when buying real estate in BC. This blog will explore the key laws and regulations foreign buyers need to be aware of, specifically in the Greater Victoria real estate market, so that you can navigate your purchase with confidence.
1. The Foreign Buyer Ban: What You Need to Know
In an effort to cool the housing market and make homeownership more accessible to British Columbians, the provincial government introduced a Foreign Buyer Ban in 2018. This ban prohibits foreign nationals (non-Canadian citizens or permanent residents) from purchasing residential property in certain regions of BC, including Greater Victoria.The ban applies to all residential properties in Greater Victoria, Vancouver, and surrounding areas, with some exceptions. It’s important to note that the ban applies only to foreign nationals—so if you’re a Canadian citizen or a permanent resident of Canada, the foreign buyer ban does not affect you. Additionally, the ban does not apply to commercial properties, so foreign investors can still purchase commercial real estate in Victoria.2. What Is Considered a Foreign Buyer?
A foreign buyer is typically defined as anyone who is not a Canadian citizen, permanent resident, or a person who holds refugee status in Canada. For example, a U.S. citizen or a resident of another country who doesn’t have Canadian citizenship or permanent resident status would fall under the definition of a foreign buyer.Foreign buyers looking to purchase residential property in BC must be mindful of the ban’s restrictions, but there are avenues through which they may still be able to purchase real estate.3. Exemptions to the Foreign Buyer Ban
There are several exemptions to the foreign buyer ban that may allow foreign nationals to buy property in BC, even in Greater Victoria. Some of these exemptions include:- Temporary Residents: Foreign nationals who are legally authorized to work or study in Canada on a valid visa may be able to purchase property if they meet certain conditions, such as being in BC for at least 183 days per year.
- Spouses of Canadian Citizens or Permanent Residents: If a foreign national is married to or in a common-law relationship with a Canadian citizen or permanent resident, they may be eligible to purchase a home under the exemption.
4. The Speculation and Vacancy Tax (SVT)
In addition to the foreign buyer ban, BC also has a Speculation and Vacancy Tax aimed at taxing vacant or under-utilized properties. This tax is designed to address the issue of empty homes and speculative real estate investment.Foreign buyers who purchase property in BC, including Greater Victoria, may be subject to the Speculation and Vacancy Tax (SVT) if their property is not their principal residence. This tax is levied on vacant properties and can vary depending on the municipality. Greater Victoria, including Oak Bay, Saanich, and Victoria West, is subject to this tax, so foreign buyers should be aware of the annual assessment and potential costs associated with owning a vacant property.The SVT is calculated based on the property’s assessed value and can add additional financial burdens for foreign buyers who plan to leave their property vacant. If you are a foreign buyer, make sure to understand how this tax applies to your situation and the potential tax obligations before making a purchase.5. The Property Transfer Tax (PTT)
For foreign buyers purchasing real estate in BC, an important cost to consider is the Property Transfer Tax (PTT). This tax applies to all real estate transactions in BC, including Greater Victoria, and is calculated as a percentage of the purchase price or the fair market value of the property, whichever is higher.The tax is broken down into the following rates:- 1% on the first $200,000
- 2% on the portion between $200,000 and $2 million
- 3% on the portion above $2 million
6. Legal Requirements for Foreign Buyers
Foreign buyers who wish to purchase real estate in BC should be aware of the legal requirements involved. The process of purchasing property in BC for a foreign national is similar to that for a Canadian citizen, but there are additional steps to consider:- Obtain a Canadian Tax Identification Number (TIN): Foreign buyers will need a Canadian TIN to pay taxes and complete the purchase.
- Hire a Real Estate Lawyer: It’s highly recommended that foreign buyers hire a real estate lawyer who specializes in BC property law. This lawyer can help navigate the complexities of the legal system, ensure compliance with foreign buyer laws, and advise on the implications of taxes and fees.
- Use a Qualified Realtor: Working with a realtor who is familiar with BC's real estate market, as well as foreign buyer regulations, can help you find the right property and guide you through the purchasing process.