By now you may have heard of the numerous changes that have taken place in legislation pertaining to residential real estate in British Columbia. It can all be a bit overwhelming so I thought it would be a good idea to summarize these changes for those who are not aware of these new laws.
New Home Buyer Rescission Period
As of the beginning of January, the new Home Buyer Rescission Period (“HBRP”) is now in force for residential real estate transactions in the province.
The B.C. government introduced the HBRP, also known as the “cooling-off period,” as a consumer protection measure to give home buyers time to consider whether a purchase is right for them. HBRP gives buyers the right to rescind their offer up to three business days after the offer is accepted. If a buyer changes their mind, they must pay a 0.25% rescission fee to the seller. The buyer can rescind for any reason within this three business day period.
Prohibiting the Purchase of Residential Property by Non-Canadians
The Act prohibits individuals who are not Canadian citizens or permanent residents of Canada (collectively, “non-Canadians”) from purchasing residential property in Canada for a period of two years. The prohibition also applies to corporations that are not incorporated in Canada or are controlled by non-Canadians.
- Prohibits non-Canadians from directly or indirectly purchasing residential property in Canada for a period of two years, which includes purchases made through corporations, trusts, or other legal entities;
- Applies to residential property, which includes detached homes or similar buildings of one to three dwelling units as well as parts of buildings such as semi-detached houses, strata units, or other similar premises;
- It doesn't apply to Canadians, permanent residents, or temporary residents who meet the exception criteria outlined in the Regulations. Sets out exemptions for certain classes of people such as: refugees, individuals who purchase residential property with their spouse or common-law partner (provided the spouse or common-law partner is eligible to purchase residential property), temporary residents in Canada who satisfy the prescribed conditions in the regulations, and other classes of persons set out in the regulations.
- The Act defines residential property as buildings with 3 dwelling units or less. This includes semi-detached houses and condominium units. The Act doesn’t prohibit the purchase of larger buildings with 4 or more dwelling units.
- Non-Canadians can purchase residential properties located outside of Census Metropolitan Areas (CMA) and Census Agglomerations (CA).
- Certain exceptions apply allowing Non-Canadians to purchase a residential property in defined circumstances.
Strata Property Act Amendments
On November 24, 2022, the BC Government passed amendments to the Strata Property Act.. There are two changes that will affect REALTORS® and their clients when dealing with strata properties.
- All rental restriction bylaws are removed, except for bylaws restricting short-term rentals such as Airbnb or VRBO, and
- All age restriction bylaws are removed, with the exception of “seniors only” (55-plus) rules. This means that a strata will no longer be allowed to have 19-plus age restrictions.
Residential Property Flipping Rule
Individuals who sell a residential property within 12 months of purchase may be subject to the Residential Anti-Flipping Rule. Under the new rules, any profit from the sale of residential real estate (including rental property) within a year would be taxed as 00% 1business income and ineligible for either the 50 per cent capital gains rate or the principal residence exemption (Canadian residents only).
- Addition to household, such as new children through birth or adoption, or taking in an elderly parent,
- Dissolution of marriage or common-law partnership,
- Threat to personal safety, such as domestic violence,
- Employment changes
- Involuntary disposition, (eg: natural or human-caused disaster)
Multigenerational Home Renovation Tax Credit
Effective January 1, 2023, the Multigenerational Home Renovation tax credit will be available. This tax credit will cover eligible homeowners up to 15 per cent (to a maximum of $7,500) for creating a secondary unit in their home to accommodate a senior or adult with a disability.