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In recent years, the provincial and federal governments have brought into effect several layers of legislation that are aimed at addressing residential housing concerns in British Columbia and Canada. Examples, but not an exhaustive list, of this legislation include Speculation Tax, Under-Used House Tax, and Additional Property Transfer Tax.
Many of these new regimes require constant disclosure and filings, which means that most people are aware whether these apply to them. But that is not necessarily the case for the Additional Property Transfer Tax or "APTT". Many people may unexpectedly and unnecessarily fall into this regime.
APTT is a property transfer tax, broadly speaking, that is levied on any person who is not a Canadian citizen or a permanent resident who takes a legal interest in residential property in British Columbia in certain specified areas. Once APTT applies, there is no discretionary appeal. APTT is equal to 20% of the fair market value of the interest being acquired, which means that it is a very punitive transfer tax.
This tax also applies if a foreign national receives a legal interest in a residential property through the death of a joint tenant. For example, if parents place their children on the title of their home as joint tenants, and one of those kids is a foreign national, then upon the death of any of the Canadian title holders, that person will be subject to APTT. This can completely defeat estate planning or retirement goals for families and individuals.
It is critical that people review their estate plans and the titles to their homes to ensure that they are current and that they do not fall into any of the unexpected taxes that have recently been introduced. Once APTT applies, it cannot be reversed, so it is important to get advice before it applies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
