Taxes on your Okanagan Property
Overview of taxes on BC real estate and what you may owe on your home.
November 8, 2024
Underused Housing Tax (UHT)
The Underused Housing Tax is a federal tax targeting vacant or underused residential properties, particularly those in areas like Kelowna, primarily owned by non-residents. This 1% annual tax on the property’s assessed value aims to boost housing availability for Canadians by reducing vacancy rates in popular real estate markets like the Okanagan.
GST on Homes
The Goods and Services Tax (GST) applies to newly constructed and substantially renovated homes in the Okanagan and across Canada at a rate of 5%. While resale homes are generally exempt, buyers of new Kelowna homes may qualify for a partial GST rebate depending on the purchase price, helping reduce the upfront cost of new real estate investments.
Property Transfer Tax (PTT)
In BC, the Property Transfer Tax is a provincial tax due when a property changes ownership. The tax rate starts at 1% on the first $200,000, 2% on $200,000 - $2,000,000, 3% on $2,000,000 - $3,000,000 and an additional 2% on everything over $3,000,000. This tax affects real estate transactions throughout the Okanagan, including Kelowna, with certain exemptions for first-time homebuyers.
Empty Homes Tax - Vancouver
Vancouver’s Empty Homes Tax, or Vacancy Tax, charges 3% of the property’s assessed value for homes left unoccupied for most of the year. This measure aims to encourage owners to rent out properties, alleviating housing shortages in high-demand areas and setting a precedent that could influence future policies in Kelowna and the Okanagan region.
Speculation and Vacancy Tax (SVT)
The Speculation and Vacancy Tax is a provincial tax on vacant properties in high-demand urban areas, including Kelowna and other parts of the Okanagan. The rate is 0.5% for BC residents and up to 2% for foreign owners. Exemptions apply to primary residences and qualified long-term rentals.
Foreign Buyers Tax
Designed to limit foreign real estate demand, the Foreign Buyers Tax adds a 20% charge on the purchase price of residential properties in specific BC areas, including Metro Vancouver, Kelowna, and the wider Okanagan. This tax applies to non-resident buyers looking to invest in BC real estate. Note that there is currently a foreign buyers ban in place in Canada until January 1, 2027 affecting certain regions including the Okanagan. Contact me for more info on whether or not this will affect your ability to purchase a home.
BC Home Flipping Tax
The BC Home Flipping Tax discourages rapid sales of properties within a 12-month period by treating profits as fully taxable business income. This tax affects speculative investments in Kelowna real estate, deterring short-term flipping in the Okanagan market.
Federal Flipping Tax Canada
Effective across Canada since 2023, the Federal Flipping Tax applies to profits from properties resold within one year including your primary residence. Classifying these quick profits as 100% business income rather than capital gains (without the usual capital gains tax benefit), this tax aims to curb speculative flipping in high-demand areas like Kelowna and the Okanagan real estate market.
