A $172,000 Mistake

How a REALTOR® and a Lawyer were found responsible for their clients' taxes

This is a story about the Foreign Buyers' Tax, which is one of the layers of BC's Property Transfer Tax.

When a client seeks the advice of a Realtor, notary public or a lawyer, these professionals are obligated to meet a particular level of standard of care. This standard includes knowing certain triggers for any additional taxes their clients might need to pay.

In this case, the Property Transfer Tax has one rate for Canadian citizens or permanent residents, and a higher rate for people who those who are not Canadian citizens or permanent residents.

The buyers in this case were not Canadian citizens or permanent residents, and did not pay the Foreign Buyers' Tax when they should have. They were assessed this additional tax, and then sued their Realtor and their lawyer for reimbursement.

The Case

Here is the text of the case, if you'd like to read it through yourself:

Shave v. Century 21 Assurance Realty Ltd.

...the plaintiffs have established that, but for the breaches by the realtor and the solicitor, they would not have assessed the Foreign Buyer's Tax...

Shave v. Century 21 Assurance Realty Ltd. 2022 BCSC 183 (CanLII) at paragraph 100.

Property Transfer Tax

Anyone who buys or acquires property in BC needs to consider the Property Transfer Tax. This is a graduated tax - the more expensive the property, the higher the tax.

There are some exemptions from this tax for:

  • First Time Homebuyers
  • surviving joint tenants
  • newly built homes
  • some types of "family transfers"

The tax rate is:

  • 1% of the property's fair market value up to and including $200,000
  • 2% of the property's value from $200,001 up to and including $2 million
  • 3% on everything over $2 million in value
  • an additional 2% on any property over $3 million
  • an additional 20% if you are buying residential property in certain locations in BC and you don't qualify for an exemption from the Foreign Buyers' tax

So what does this mean to a buyer?

Here are some examples of the difference in the tax amount, according to whether the buyer is a Canadian citizen or permanent resident or not.

Purchase Price PTT payable if Buyer is Canadian Citizen or permanent resident PTT payable if Buyer does NOT qualify for the Foreign Buyers' Tax Exemption.
$500,000 $8,000 $108,000
$1.2 million $22,000 $262,000
$2.3 million $47,000 $507,000
$3.4 million $88,000 $768,000

You can see that the taxes payable are quite significantly higher if the buyer is NOT a Canadian citizen or permanent resident.

So how do you avoid this problem?

Advise your Realtor, notary public or lawyer immediately if you are a:

and the property is in one of the following areas of BC:

  • Capital Regional District
  • Fraser Valley Regional District
  • Metro Vancouver Regional District
  • Regional District of Central Okanagan
  • Regional District of Nanaimo

Call us. We would be happy to help you with your real estate needs.