CHANGES TO REAL ESTATE IN 2023

2023 brought changes for how real estate works in British Columbia and Canada as a whole. Check out this blog to find out what changes these are, and if they affect you!

Watch the condensed version above, with the two largest changes that have been implemented: Foreign Buyer Ban and Rescission Period.

Foreign Buyer Ban

The Prohibition on the Purchase of Residential Property by Non-Canadians Act (aka Foreign Buyer Ban) was put into place on January 1, 2023. This is a federal change which prohibits non-canadians from buying residential real estate in Canada for 2 years. While this ban was just rolled out, this idea got its wheels spinning years ago when the Liberal Party promised the ownership ban in the 2021 election and rolled it out in the federal Budget  in 2022.

The budget was clear on the government’s goals, as they stated “We will do everything we can to make the market fairer for Canadians. We will prevent foreign buyers from parking their money in Canada by buying up homes. We will make sure that houses are being used as homes, rather than as commodities to be traded.”

Like usual, these changes come with a list of exceptions:

• Temporary resident within the meaning of the ‘Immigration and Refugee Protection Act’
• A non-Canadian who buys residential property with a Canadian spouse or common-law partner if the spouse or common-law partner is a Canadian citizen or PR, or person registered as an Indian under the Indian Act
• Those with temporary work permits, refugee claimants, international students (who meet certain criteria)
• Homes in municipalities with a core population of less than 10,000
• Recreational properties such as cottages and lake houses

Just a few years ago, a foreign buyer tax was implemented in BC to limit the amount of foreign buyers entering our market as the prices were skyrocketing. These new changes are definitely a more extreme measure, but will they really make that much of a difference?

Homebuyer Rescission Period

The Homebuyer Rescission Period started on January 3rd, 2023, and implemented a mandatory rescission period for home buyers in BC, so they have a 3-day period to back out of a residential purchase after signing a contract with proper written notice.

If a buyer decides to exercise this right, they will pay a penalty to the seller equivalent of 0.25% of the purchase price. This is mandatory and is written into the Contract of Purchase and Sale. 

They are hoping this change will allow buyers more of a chance to do their due diligence among many competing and subject-free offers we were experiencing in the last few years.

This change really only affects subject-free offers.

Residential Property Flipping Rule

Individuals who purchase a residential property and sell it within 12 months of their purchase may be subject to this federal tax, and any profit from the sale, within a year would be taxed as business income and ineligible for either the 50% capital gains rate or the principal residence exemption.

Empty Home Tax Increase

The Empty Homes Tax in the city of Vancouver will be increasing from 3% to 5% in 2023.

Homeowners in Vancouver have to declare every year that their home is not subject to the Empty Home tax. Declaration deadline this year is February 2, 2023.

Multigenerational Home Renovation Tax Credit

This tax credit is for families and applies to eligible construction costs for those adding a secondary unit to their home to allow an immediate or extended family member to live with them.

The tax credit covers 15 % of the costs, to a maximum of $7,500, and is a federal tax credit to make real estate more affordable for Canadians.

How Do You Think These Changes Will Affect You?