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The Property Playbook: Acquiring, Holding, and Disposing of Residential Real Estate in B.C.

April 26, 2024

In recent years, each level of government—federal, provincial, and municipal—has introduced legislation to further their goals of increasing the availability and affordability of residential real estate in Canada, and improving the transparency of the true ownership of Canadian real estate.

When combined with existing legislative requirements, these new pieces of legislation make the acquisition, holding, and disposition of Canadian real estate a complicated matter which requires compliance with numerous federal, provincial, and municipal laws. 

We’ve put together the following guide to highlight a number of these laws, and to serve as a partial checklist of things to consider when acquiring, holding, and disposing of residential real estate in B.C. and Vancouver. As you navigate the real estate landscape in B.C., from federal prohibitions affecting non-Canadians to provincial taxes and compliance requirements, be sure to note the below information and contact your DMCL advisor with any questions you might have.

Acquiring residential real estate in B.C.

Prohibition on the Purchase of Residential Property by Non-Canadians Act (Federal)

There is a two-year prohibition on the acquisition of Canadian real-estate by non-Canadians. The prohibition commenced on January 1, 2023, and the government recently proposed to extend the ban for an additional two years.

Income Tax Act (Federal)

If the vendor is a non-resident of Canada, the purchaser may be required to withhold 25% to 50% of the purchase price from the payment to the vendor, and can be held personally liable for that amount if they fail to make the required withholding.

Excise Tax Act (Federal)

The purchaser will be subject to 5% GST on new homes. In some cases, the purchaser might be able to obtain a partial rebate of the GST paid.

Property Transfer Tax (PTT) Act (B.C.)

  • 1% on the first $200,000, 2% on the next $1,800,000, and 3% on any excess, plus an additional 3% on any value in excess of $3,000,000.
  • An additional 20% foreign buyer’s tax on residential property located in certain areas of B.C.

Land Ownership Transparency Act (B.C.)

Reporting is required when registering a legal interest in B.C. land at the Land Titles Office

Holding Residential Real Estate in B.C.

For use as a residence, vacation property, etc.

Income Tax Act (Federal)

A change in use of the property (e.g., from a residence to a rental property) can result in the realization of any accrued gains on the property.

For use as a rental property

Income Tax Act (Federal)

  • The rental income must be reported in the owner’s annual income tax return.
  • A change in use of the property (e.g., from a rental property to a residence) can result in the realization of any accrued gains on the property.
  • Proposed denial of expenses incurred to earn short-term rental income where the rental is not in compliance with provincial or municipal laws or regulations related to short-term rentals. [1]
  • If the owner is a non-resident of Canada, the tenant is required to withhold 25% from all rent payments made to the landlord. The withholding amount can be reduced if the owner files an undertaking with the Canada Revenue Agency and appoints a Canadian agent to receive the rent payments.

Excise Tax Act (Federal)

The owner is required to collect 5% GST on rental income from short-term rentals.

Provincial Sales Tax Act (B.C.)

The owner is required to collect:

  • 8% PST on sales of short-term accommodation provided in B.C.
  • Up to 3% Municipal and Regional District Tax (MRDT) on sales of short-term accommodation provided in certain municipalities and regional districts in B.C.
  • 2.5% “major events” MRDT on sales of short-term accommodation provided in the City of Vancouver.

For all properties

Income Tax Act (Federal)

Where legal title to the property is held in a bare trust arrangement, the trust must file an annual T3 Trust Income Tax and Information Return.

Empty Homes Tax – Vacancy Tax By-law 11674 (Vancouver)

  • A 3.0% annual tax on the assessed value of the property.
  • Annual declaration of the use of the property required.

Speculation and Vacancy Tax Act (B.C.)

  • A 0.5% to 2.0% annual tax on the assessed value of the property.
  • Annual declaration of the use of the property required.

Underused Housing Tax Act (Federal)

  • A 1.0% annual tax on the assessed value of the property.
  • Most owners are not subject to the tax and not required to file a tax return; however, owners who qualify for an exemption from the tax must file a tax return annually to claim the exemption.

Land Ownership Transparency Act (B.C.)

Reporting is required for any changes of interest holders.

Disposing of Residential Real Estate in B.C.

Income Tax Act (Federal)

  • The disposition must be reported in your income tax return, even if the entire gain on disposition is eligible for the principle residence exemption.
  • 100% income inclusion for capital gains realized on the sale of a property owned for less than 365 consecutive days, subject to exceptions for certain life events. [2]
  • A non-resident vendor:
    • Should obtain a clearance certificate from the CRA prior to disposing of the property so as to reduce the amount that the purchaser is required to withholding from the payment of the purchase price (see Acquiring Residential Real Estate in B.C.).
    • Must report the disposition to the CRA within 10 days; and,
    • Must file a Canadian income tax return in respect of the disposition.

Excise Tax Act (Federal)

The vendor may be required to collect 5% GST on the sale of the property (e.g. on the sale of a new home or a home that has undergone a substantial renovation, on the sale of a property that was used for short-term rentals, etc.).

Residential Property (Short-Term Holding) Profit Tax Act (B.C.)

Up to 20% tax on the profit realized on disposition of a property which occurs less than 730 days after the property was acquired, subject to exceptions for certain life events. Applies to dispositions occurring on or after January 1, 2025.

Whether you’re a first-time homebuyer, a seasoned investor, or somewhere in between, staying informed and compliant with these regulations is essential for maximizing your investment and navigating the real estate market effectively. At DMCL, we’re dedicated to assisting you with expert advice tailored to your unique real estate needs and circumstances. Contact your DMCL advisor for assistance in complying with these obligations and any other considerations regarding your real estate portfolio.


Article written by Stewart Bullard, CPA, CA


[1] See Cracking Down on Non-Compliant Short-Term Rentals

[2]E.g. death, marriage breakdown, a serious illness, job transfer or loss, threats to personal safety, etc.