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This article provides an overview of purchasing residential real estate in British Columbia.

1. Prohibition on Purchase of Residential Property by Non-Canadians

Before proceeding with the rest of this article, please note that the federal government has instituted a two- year prohibition as of January 1, 2023¹ on the purchase of residential property in Canada** by “non- Canadians”, including the following:

• persons who are not Canadian citizens;
• persons who are not permanent residents of Canada; and
• a corporation incorporated outside of a Canadian jurisdiction; and
• a private corporation incorporated in Canada but is controlled*** by non-Canadian citizens or non-permanent residents of ²

**The areas in Canada in which non-Canadians are prohibited from purchasing residential property exclude areas outside of what Statistics Canada defines as “census agglomeration areas” (i.e. an area with a core population of at least 10,000) and “census metropolitan areas” (i.e. a population centre with at least 100,000 people, of which at least 50,000 or more must live within the core area of that population centre as defined by Statistics Canada). ³

***The definition of “control” under the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act is complex and we recommend that you seek legal counsel prior to purchasing residential property if you wish to use a private corporation involving any non-Canadian owners (whether such ownership is direct or indirect) or directors.

There are limited exemptions to the above-noted prohibition. Please contact the authors if you have any questions on the above-noted prohibition.

2. Offer and Acceptance

A prospective purchaser of a residential property must first make an offer to the vendor to acquire the property. If the vendor accepts the purchaser’s offer, the purchaser has the right to withdraw from the purchase within three business days of the offer being accepted. If the purchaser withdraws, the purchaser must pay to the vendor a rescission fee equal to 0.25 % of the purchase price.⁴ If the property is a pre-sale development unit, the purchaser may cancel the contract within seven days after the later of the date on which the contract is signed and the date on which the purchaser acknowledges receipt of a copy of the disclosure statement from the developer.⁵

3. Removing Subjects

In an offer to purchase residential real estate, a prospective purchaser may stipulate one or more conditions which must be fulfilled by a certain date before the purchase is completed. These conditions may include the purchaser successfully obtaining financing to acquire the property, the purchaser being reasonably satisfied with the results of a property inspection, the vendor addressing certain defects in the property before the purchase is completed, or (in the case of new construction) confirming the new home warranty and the certificate of occupancy for a newly constructed home. These conditions are colloquially known as “subjects”, and the deadline for fulfilling subjects is known as the “subject removal date”. The act of declaring subjects as being fulfilled is known as “removing” subjects.

On the subject removal date, a purchaser has the option to:

• not remove subjects and demand the vendor to return any deposits paid by the purchaser under the accepted offer; or
• remove subjects and proceed with the completion of the

Oftentimes, prior to subject removal, the purchaser and the vendor renegotiate the terms of the purchase contract to address any issues which may have arisen or been identified prior to subject removal. The purchase would then proceed on such renegotiated terms.

4. Taxes Payable on Purchase

Broadly speaking, you may be required to pay two types of taxes upon acquisition of residential real estate in British Columbia: (i) goods and services tax (“GST”), which is imposed at the federal level; and (ii) property transfer tax (“PTT”), which is specific to British Columbia.

Under the federal Excise Tax Act, if you acquire a new or substantially renovated residential property, you may be required to pay GST at 5% of the fair market value of the property.⁶ Note that there may be certain rebates available for landlords renting out newly constructed or substantially renovated residential rental properties with fair market values of less than $450,000 per unit if the rental accommodation is intended for long-term use as a residence.⁷

Under the B.C. Property Transfer Tax Act, PTT is payable at 1% on the first $200,000 of the property’s fair market value, 2% on the amount between $200,000 and $2,000,000, and 3% on the amount greater than $2,000,000. If the property is worth over $3,000,000, a further 2% tax will be applied to the residential property value greater than $3,000,000.⁸ A residential property purchase may qualify for an exemption from PTT in very limited circumstances. Please contact one of the authors if you would like an analysis on whether your purchase would qualify for a PTT exemption.

Please note that, for residential properties in certain areas of British Columbia (including most of the Metro Vancouver Regional District), if the purchaser is a foreign national, foreign corporation, or if the purchase is structured to involve a taxable trustee (i.e. a trust of which the trustee is a foreign national or corporation or of which a foreign national or corporation holds a beneficial interest in the residential property as a beneficiary), then the purchaser would be required to pay an additional PTT at a rate of 20% on the fair market value of that residential property.⁹ We note that, due to the enactment of the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act, most individuals, entities or trustees which would be required to pay additional PTT in British Columbia would be prohibited from purchasing residential properties in Canada until the end of 2024. As noted at the beginning of the article, please seek legal counsel if you wish to purchase residential property in British Columbia through a private corporation involving any non-Canadian owners (whether such ownership is direct or indirect) or directors.

There are limited exemptions from Additional PTT which are available. For instance, if you are a foreign national individual who has received confirmation under the B.C. Provincial Nominee Program by the time the property transfer is registered with the Land Title Office, and the property will be used as your principal residence, you do not pay the additional PTT if you claim this exemption when the property is registered under your name.¹⁰

5. Structure of Title Ownership

Joint Tenancy vs. Tenancy-in-Common

After closing, if there are multiple registered owners of the property, the registered owners may hold title to the property as either joint tenants or tenants-in-common.

Joint tenancy means that two or more people own the property in undivided parts, with an equal right to use the entire property. Upon the death of one joint tenant, the property is automatically transferred to the surviving joint tenant. The property does not become a part of the estate of the person who died and the property will not be subject to probate fees (which is 1.4% of the value of the assets of the estate in British Columbia if such value exceeds $50,000),11 will not be taxed as a part of the estate and will not be distributed among the beneficiaries of the estate.

Most spouses prefer being registered on title as joint tenants.

Conversely, if two or more people own property as tenants-in-common, the owners can own different proportions of the property. For instance, Owner A and Owner B can own 10% and 90% of the property, respectively, and they can sell or mortgage their respective part of the property without obtaining the other party’s consent. When one tenant-in-common dies, that person’s share of the property becomes a part of the deceased’s estate, which will be subject to probate fees and will be distributed to the beneficiaries of the estate.

Tenancy-in-common is typically preferred for blended families and holding recreational properties enjoyed by multiple parties.

1 Budget Implementation Act, 2022, N0. 1, S.C. 2002, c. 10, ss. 235, 236.

2 Prohibition on the Purchase of Residential Property by Non-Canadians Act, S.C. 2002, c. 10, s. 235, s. 2, sub verbo “non- Canadian” [“Prohibition Act”].

3 Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, SOR/2022-250, s. 3(1); ibid, s. 2; Statistics Canada, Standard Geographical Classification (SGC) 2021 – Volume I, The Classification, online: < https://www150.statcan.gc.ca/n1/en/pub/12-571-x/12-571-x2021001-eng.pdf?st=ARCYWPJV >, page 576.

4 Property Law Act, c. 377, RSBC 1996, s. 42(1); Home Buyer Rescission Period Regulation, B.C. Reg. 175/2022, ss. 4, 6(1).

5 Real Estate Development Marketing Act, c. 41, SBC 2004, s. 21.

6 Excise Tax Act, ss. 123(1), sub verbo “taxable supply”, 165(1), 190(1)(d).

7 Ibid, s. 254(2); Government of Canada, “GST/HST New Residential Rental Property Rebate”, online: < https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-home- construction/new-residential-rental-property-rebate.html >.

8  Property Transfer Tax Act, c. 378, RSBC 1996,  ss. 2(1), 3(1), 3.01(4) [“PTT Act”].

9 Property Transfer Tax Regulation 74/88, s. 17.02 [“PTT Regulation”]; PTT Act, supra note 8, ss. 2.01, sub verbo “taxable trustee”, 2.02(4).

10 PTT Regulation, ibid, ss. 17.1, sub verbo “provincial nominee”, 19.

11 Probate Fee Act, S.B.C. 1999, c. 4, s. 2(3).