Along with a fresh new year comes some fresh new policies for those looking to enter the Okanagan residential property market in 2023.
Take a minute to familiarize yourself with the following three major players that have recently come into effect, because they’re not ones you want to be caught out by!
1. Home Buyer Rescission Period
January 3 saw the new Home Buyer Rescission Period (otherwise referred to as the ‘Cooling Off Period’), become a mandatory step in most residential real estate transactions across B.C.
Prospective purchasers of most property types now have a three-day window after their offer is accepted to withdraw from a purchase agreement no questions asked. This rescission period is separate from any condition precedents contained in the offer, such as inspection, approval of financing or documentation.
This period will include a rescission (cancellation) fee of 0.25% of the purchase price, or $250 for every $100,000, for those who ultimately choose to back out of a deal. For example, if the purchaser exercises the right of rescission on a $1-million home, they would be required to pay $2,500 to the seller.
As we’re yet to see how these changes will impact the market, it is certainly a factor for home buyers to keep in mind.
2. Prohibition on the Purchase of Residential Property by Non-Canadians Act (A.K.A. the Foreign Buyer Ban)
As of January 1, the Federal Government of Canada has implemented a two-year ban on foreign ownership of residential property across Canada. Properties that fall under this category include:
- A detached house or similar building;
- Semi-detached house, rowhouse unit, residential condominium unit or similar premises; or
- Immovable property
This new regulation prohibits property sales to those not classed as a Canadian citizen or permanent resident as well as any commercial enterprises that are not incorporated under Canadian Law.
The Government has however announced certain exemptions to this new ruling. Some of these include:
- A temporary resident within the meaning of the Immigration and Refugee Protection Act who satisfies prescribed conditions;
- 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 permanent resident;
- A person registered as an Indian under the Indian Act; and
- Selected geographical locations (including Whistler, Pemberton, and the Sunshine Coast)
Penalties up to $10,000 will be enforceable to any non-Canadians who are found guilty of contravening this new policy, and in some cases, the home owners may be required to sell the property.
Click here for more information on this new Act.
3. Anti-Flipping Tax
For anyone looking to enter the real estate market this year, take heed of new ruling around purchasing any property with intent to quickly resell and make a profit. This activity is generally referred to as ‘flipping’.
Commencing January 1, the Federal Government has imposed a new tax regulation on any profits generated from a sale of property that has been owned for less than 12 months. House flippers, beware!
This new tax law will disallow the use of the Principal Residence Exemption (PRE), and any gain realized from the sale will be taxed as business income, not as a capital gain. Homeowners will need to prove to the Canada Revenue Agency (CRA) of any exception.
This new measure comes into effect to help cool off demand throughout the market, but also comes with potential exceptions such as death, breakdown of a relationship, serious illness or disability, relocation for work, or insolvency/bankruptcy.
Unsure how these new policies will affect your buying journey? Reach out to one of our trusted Stilhavn advisers to receive a full breakdown on each of these changes and how they will affect your next real estate purchase.
Let us handle the stressful bits, the uncertainties and the unfamiliar. We understand the market and these new changes and can confidently walk you through each step, right to your new front door.