Issuu

H O M E L I F E G L E N AY R E R E A LT Y C O M PA N Y LT D.

LOOKING AHEAD WITH SOME HELP FROM LANDCOR DATA CORP.

NEW TAXES, NEW RULES

WHAT YOU NEED TO KNOW ABOUT RECENT TAX ADDITIONS

A NEW VISION FOR MAPLE RIDGE NEWLY ELECTED MAYOR MORDEN SHARES HIS FUTURE PLANS

HEAD TO HEAD

DEVELOPMENT LAND IN 2019 MCQUARRIE ANSWERS OUR TOP 5 BURNING LEGAL QUESTIONS

A SMOOTH SEA NEVER MADE A SKILLED SAILOR. FRANKLIN D. ROOSEVELT

Letter from Joe Varing Hear from Joe himself and find out what this year holds for Varing Marketing Group.

Market Review Get a quick breakdown of what’s happening with Fraser Valley development.

Looking Ahead Predicting 2019 with some help from Landcor Data Corp.

VARING MAGAZINE 2019 ISSUE Publisher Gabriella Denizot gabriella@varinggroup.com Editor Tori Thistlethwaite Art Director Gabriella Denizot Contributors Joe Varing Jeff Tisdale Rick Gendemann Mayor Mike Morden Jason Sandhu Tori Thistlethwaite Printed by Glenmore Printers, Richmond BC Contents ©2019, Varing Marketing Group Varing Marketing Group Homelife Glenayre Realty Company Ltd. #360-3033 Immel St. Abbotsford, BC V2S 6S2 604.565.3478 WWW.WESELLDIRT.CA

Thinking of Selling? Find out the top things you need to consider before you sell.

A New Vision for Maple Ridge Newly elected Mayor Morden of Maple Ridge shares his future plans for the city.

New Taxes, New Rules Rick Gendemann, partner at Manning Elliott LLP. updates us on recent tax additions.

Development Land in 2019 Partner at McQuarrie, Jason Sandhu, answers our top five burning legal questions.

Varing in the Community Involvement in local events and charities is one of Varing Marketing Group’s core values. See what we've been up to this year.

“

BELIEVE IN YOUR INFINITE POTENTIAL. YOUR ONLY LIMITATIONS ARE THOSE YOU SET UPON YOURSELF. ROY T. BENNETT

”

LETTER FROM JOE VARING The only constant is change, and right now, the real estate industry is experiencing an upheaval–one that has industry professionals going “Head-to-Head” with opposing views concerning the present state of the market and its perceived direction. Uncertainty and speculation have been common topics, but we want to take control of the narrative. Key players in the industry have come together for this issue of Varing Magazine to offer insights ranging from changes to tax legislation and pricing history to what we can expect from real estate moving forward. Once again, we’re ready to provide you with fresh information to ensure that you are up to speed and able to make your own judgements on what is happening in the industry. Mike Morden, the newly elected Mayor of Maple Ridge graciously shares his outlook and commitment to reinvigorating the city. Rick Gendemann, a Chartered Professional Accountant from Manning Elliott LLP, sheds light on the recent updates to tax laws surrounding real estate ownership. Jason Sandhu, real estate lawyer and partner at McQuarrie, addresses commonly asked legal questions relating to the real estate industry. Jeff Tisdale, CEO of LandCor Data Corp., revisits the global credit freeze of 2008 and 2009, and he explains how it compares to our current

environment. Jeff’s snapshot of the past is enlightening and allows us to consider the future state of the real estate market. We are facing an ever-changing real estate landscape where uncertainty and opportunity will be head-to-head. We strongly believe that all market fluctuations are necessary to long-term economic stability and prosperity, placing emphasis on the real estate market’s history, rather than media hype. In our humble opinion, these are exciting times– times that will test the depth of the players in our industry and the market. We quote Barbara Corcoran from New York, “A funny thing happens in real estate. When it comes back, it comes back up like gangbusters.” We say, go long. Respectfully, Joe Varing

JOE VARING PERSONAL REAL ESTATE CORPORATION LTD.

Embracing Varing Marketing Group’s core values in all aspects, Joe, founder and principal always puts people first while exceeding expectations and driving change. With over ten years of industry experience and successful ventures, Joe continues to use his extensive knowledge of the land to both lead the industry and his team to new heights.

RECOGNITION

13+

1 Agent BC - Sales Volume, Homelife Realty

YEARS IN BUSINESS

2018 - 2017 - 2016 - 2015 - 2014 - 2013 #

260+

2018 - 2017 - 2016 - 2015

DEVELOPMENT

1 Agent CANADA - Sales Volume, Homelife Realty

SITES SOLD

Consumer Services Excellence ABBOTSFORD - 1-5 Employees 2018 OUR CORE VALUES Our core values represent who we are as people and as professionals. More than just a plaque on our wall, they help guide our decisions and inspire us both in real estate and life in general. PURSUE GREATNESS

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2018

MARKET REVIEW After two record-breaking years that saw substantial growth for both sales volume and sales numbers, 2018 was anything but incredible. With a perfect storm consisting of the B-20 stress test, rising interest rates, tighter lending requirements, and newly implemented Provincial Government regulations, the real estate market in British Columbia saw a dramatic decline in sales activity. In addition, 2018 was also an election year where new mayors were elected in several major markets. The residents of Surrey, Maple Ridge, Langley City, and Mission all elected new mayors which created uncertainty for real estate buyers. With potential changes to the incoming councils appetite for development, many buyers waited to act until they had a clearer understanding. In an already turbulent year, newly elected Mayor McCallum of Surrey also scrapped the promised LRT project in favour of the more expensive but widely preferred SkyTrain system. Funding was partially secured from the previous LRT

2019

project, but the balance to cover the difference remains largely in limbo.

With the culmination of factors from 2018 and several new or recently implemented taxes, 2019 is widely expected to remain flat and observe small decreases in home pricing. These taxes include: •

Increase in Foreign Buyers tax from 15% to 20%

•

Full implementation of the Speculation and Vacancy Tax

•

Increased School Tax on real estate worth more than 3 Million

Fortunately, development landowners will continue to see interest in their properties. However as there will be more inventory on the market, buyers are expected to be increasingly selective in their acquisitions. In the midst of a mild recession in the housing market, plenty of opportunities will present themselves for both buyers and sellers. Canada’s top economists predict that current market conditions will remain as is until 2020, signalling a welcomed slow down in housing that will undoubtedly bring a more balanced real estate market.

SURREY One of the more dramatic storylines of 2018 was the cancellation of the controversial LRT project by Mayor Doug McCallum, who returned to the Mayor’s office after his initial term from 1996 to 2005. He scrapped the project, which had just secured funding, in favour of the more popular SkyTrain system. The route was also changed from the original King George, Guildford, and Newton connections to a route from King George into the heart of Langley, with stops along Fraser Highway. This threw a wrench in the city’s development scene as several large acquisitions in Guildford were made in anticipation of surrounding LRT stops. Mayor McCallum has also shifted the city’s development process to a more cautious method. Since early 2019, several Neighbourhood Community Plans, such as Redwood Heights, Grandview Heights Area 3, Guildford, and West Clayton have been in limbo, each waiting for the green light to proceed with their respective development plans.

LANGLEY In recent years, the Township of Langley has stolen the spotlight, but the City of Langley has been making waves since early 2016. It’s important to note that the downtown core will one day feature the SkyTrain’s most Eastern terminus. Although plans for the SkyTrain are still in preliminary talks, we’ve seen an increase in interest for properties along Fraser Highway with future development potential. Several developers have also positioned themselves for future growth around Willowbrook Mall, which will also boast a SkyTrain station at some point in the future. As for the Township of Langley, the region welcomed much of the same growth as a number of newly built condos and townhouses continue to be marketed and sold.

ABBOTSFORD Abbotsford continued its steady growth in 2018 and shows no signs of slowing. The year concluded with the reelection of Mayor Henry Braun which reaffirmed the city’s approval of his approach to development. The downtown core is turning into everything the city imagined, all the while attracting developer interest from as far as Vancouver. As the city’s core continues to be reinvigorated, several other areas are beginning to gain traction. Most notably, the UDistrict Plan received final approval which cements its placement as the city’s next hotspot for development. Another area of interest in the near term is East Abbotsford, primarily the Mckee Peaks area–which, though lagging behind other high priority neighbourhoods, seems to be advancing.

G N I K O O L D A E H A andCor CEO of L // le a d by Jeff Tis

p. Data Cor

TO COMMENT ON THE FUTURE OF THE REAL ESTATE MARKET, WE NEED TO REVISIT THE PAST. OVERVIEW OF BC'S DETACHED SALES ACTIVITY 2006-2018 (MEDIAN DATA)

$1.35M

$1.20M

MEDIAN SALE PRICES

$1.05M

$900K

$750K

$600K

$450K

METRO VAN

$300K

FRASER VALLEY

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 MEDIAN # OF TRANSACTIONS

80,000

BRITISH COLUMBIA

60,000

40,000

20,000

For more than twenty years, Landcor has been experiencing the highs and lows of the real estate market–with the most dramatic being the 2008/2009 real estate meltdown in the United States and the subsequent global credit freeze–and the biggest lesson we like to share is the importance of research, asking questions, and partnering with industry professionals. During the 2008 recession, the move to sustained record low interest rates as a means

landcor.com/dataviz

to jump-start the broader economy was a key economic tool used to facilitate recovery– especially in the real estate market. The graphs above is intended to provide a brief snapshot of the median sales values of the detached, or Single-Family (SFD) Home market– along with the annual inventory levels and corresponding turnover. CONTINUE READING

A HISTORY OF SHOCKING PRICES... Prices of land are often deemed too expensive. Here’s how much you could buy a typical detached lot in Vancouver back in the day.

1870

$200

l RAIL SPECUL ATION

1890

$2K

1910

$20K

l BABY BOOMERS APPEAR

1970

$30K

1990

$230K

2018

$2.07M

The graphs briefly summarize how, since the 2008/9 credit freeze, there has been a gradual rise in home values–with accelerated growth occurring between 2015 and 2017, and only recently leveling off. On the inventory side, it is clear that little new product (SFD) is being brought to market, and the annual turnover has been in decline since 2016 with fewer and fewer properties being listed. While the chart summarizes about a dozen years of market history, I went deeper, digging through anecdotal research on rural lands, going as far back as the 1880s when Vancouver was, in fact, rural. The article I found, called Vancouver Real Estate Mania by Jeff Desjardins, chronicled the time leading up to and after Canadian Pacific Railways announced that Vancouver–or at that time, Granville–would be the western terminus for the rail line. It was fascinating to read that 140 years ago folks were already saying that Vancouver was too expensive, especially since land prices (hectare–not a city lot) went from $200 in 1870 to $2,000 in 1882, and seven years later in 1889 to $20,000. If there can be one thing said about history, it’s that it’s a great teacher. Whether we are looking at real estate sentiment from the late 19th century or that of the early 21st century, the correct action to take (i.e. buy/sell now or later)

depends on the ability to access useful information and conduct research. The real estate market is not an island unto itself and has always been impacted by numerous external forces. Traditionally, interest rates, and more recently, different intervention tactics by the Federal (B-20 Stress Testing) and Provincial (Taxes such as Empty Homes, Foreign Buyer & School {$3m or greater assessed value}) governments. These measures were put in place to curtail residential real estate activity, and in the earlier chart, we can identify this starting in 2016 (Initial Foreign Buyers Tax) and can see the decline steepen in 2018 (B20 Stress Test). Navigating the real estate market today is more complicated than ever before. The adage ‘location, location, location’ no longer applies, and instead, ‘research, research, research’ has taken its place–which also happens to be a motto Landcor’s President and Founder, Rudy Nielsen, has long subscribed to. The future of the real estate market can only be understood and anticipated by those who do their research, which is our advice to you. Check out government and real estate board sites, find industry experts you trust and pick their brain, read everything you can–only then will you confidently understand where the market is going and what action you should take. 

Jeff Tisdale / CEO of Landcor Data Corp. Established in 1988, Landcor Data Corp. is a leading provider of Financial Services and Real Estate solutions that enable fast, accurate and unbiased valuation and analysis of properties throughout the province of British Columbia. Landcor maintains the best source of real estate data and analytic tools available. Visit Landcor.com or email jeff@landcor.com for more market trends and property analytics.

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THINKING OF SELLING Consumers have access to more information than ever before in the real estate market. Follow these tips to make sure you're prepared! Written by Varing Marketing Group

TAX ASSESSMENTS + TITLE SEARCHES Obtain your property’s Tax Assessment and Title Search. Both of these documents offer valuable information and can prevent many unforeseen hiccups in the selling process. Tax assessments can be found at www.bcassessment.ca and provide the following important details:

STRAIGHT TO THE SOURCE Visit City Hall where you can obtain any surveys they may have on record. While there, talk with a city planner to clarify what land uses are applicable to your property. Although the staff in planning will not provide value estimates, they can often provide insight into what sort of development potential your property has and the status of the area plan in which your property lies.

• Exact size of property. • Most recent assessed value. • Sale details for the past three years. • Recent sales of similar properties in your area. A Title Search can be obtained either online at www.ltsa.ca or at the BC Land Title & Survey Office. For a fee of $10, the following important information can be collected: • Current ownership information. • Registered Charges, Liens, and Interests. This includes current mortgage information, any registered covenants, right of ways, builders liens, Certificates of Pending litigation, executor details, Crown Debts and many more details you might not have been aware of.

INFORMATION IS KEY When considering the sale of your property, start collecting all information sent to you by realtors, developers, and anything else pertaining to your property. These will often include flyers detailing recent activity and comparable sales. This information will also give you an indication of which real estate professionals are knowledgeable about your neighbourhood. Interview a Minimum of 3 Real Estate Professionals •

Ensure they meet your requirement short list. ie. References, testimonials, track record.

•

Know your desired sale terms. Having an idea of what you want for price, subjects, and deadlines will help you find a realtor that can meet your criteria.

KNOW YOUR AREA Take the occasional drive around your neighbourhood and keep an eye out for listing signs and sold signs on similar properties. This will allow you to get a firsthand look at what’s happening in your neighbourhood, and can also provide you with a baseline for price expectations.

USE PUBLIC RESOURCES Websites such as www.rew.ca can also provide incredibly valuable information about your neighbourhood. Not only can you view similar active listings, but as of late 2018, you can also view sales history for properties similar to yours.

HELPFUL RESOURCES •

City Mapping Websites such as Cosmos for Surrey, Geosource for Langley and Ridgepoint for Maple Ridge

•

Your city’s main website for news and neighbourhood plan updates

•

Realtor.ca

•

Fraser Valley Real Estate Board (FVREB) site for more information about market health and to learn about a realtor’s professional standards.

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VISIO O

a new

Campaigning on a platform of communication and respect, newly elected Mayor Mike Morden is taking up the mantle of public office and bringing a fresh, strategic, and above all, people-first vision to Maple Ridge. His first few moves in office have set the tone for the future, seeing a continuation of his campaign promises and a commitment to calling upon and hearing the voices of the residents of Maple Ridge when it comes to development and the future of their community. Maple Ridge is changing, and this is just the beginning. Known for its green space and mountain views, Maple Ridge has a rural and quaint reputation–a reputation that often overlooks the influx of entrepreneurs who have abandoned their offices in Vancouver in favour of the affordability of Maple Ridge. Their arrival has brought with them changes to the community’s commercial and service sectors, including new businesses, ideas, and innovative plans–all of which Mayor Morden sees as the building blocks for a thriving and cohesive future for Maple Ridge.

ON O

for Maple Ridge

SITTING DOWN WITH MAYOR MORDEN

“Once we establish our vision and tell the community where we’re going, then we need to stay out of the way and let our entrepreneurs do what they do best. Broadly, we’re working to be consistent, timely and open to new ideas.”

While these changes are slowly taking root, Morden is optimistic about the future and believes that “business growth provides immediate wins for our community, with new favourite gathering places in the shape of some spectacular cafes, restaurants, and micro-breweries,” all of which will serve existing community members, as well as attract people looking for affordable housing and a community they can grow with in the coming years. To develop the city and achieve this future, Mayor Morden has been working with Council and the community, spearheading a strategic direction for Maple Ridge based on development and working with the business

community. “The sooner you establish your vision, the faster you can take the steps needed to make that vision a reality,” says Morden, who is committed to working with the business community to support efficient processes for development projects. “Once we establish our vision and tell the community where we’re going, then we need to stay out of the way and let our entrepreneurs do what they do best. Broadly, we’re working to be consistent, timely, and open to new ideas.” Morden believes that the current economic landscape presents an exciting time for development in Maple Ridge. Plans for growth are bringing a fantastic opportunity to build on the success stories of new businesses, as well as initiatives to transform the downtown core into the social, entertainment, and cultural heart of the community are a priority. “It’s gratifying at the Council level to see some leaders in the business community who are getting in early on opportunities for growth and new ventures,” says Morden. “The development is already happening, and with a coordinated plan around public safety and a strong cultural plan, the downtown has huge

upside potential to attract new retailers, restaurants and other businesses.” The landscape of Maple Ridge has already being redrawn, reworked, and refined in the past few months, with multiple major projects being pushed ahead and more being planned. Specific projects relating to the future development of the city include the Albion Area Plan, which identifies future retail and manufacturing locations, as well as the revitalization of the downtown core, which primarily focuses on increasing the commercial footprint and redeveloping existing properties to support population growth What’s clear is that the City of Maple Ridge is thriving and opportunities for development are either just being unearthed or are well on their way, laying the groundwork for a prosperous future. Almost every area of the city is being impacted by the lengthy list of projects, which include: a new community centre in the Albion neighbourhood; upgrades to the Hammond Community Centre; neighbourhood parks and gathering places in Silver Valley; new synthetic turf fields; and upgrades to the Leisure Centre and a new ice sheet–all in various stages of development. In addition to the downtown revitalization and improvements to community facilities, Maple Ridge is also well into the deployment of a Housing Action Plan to support the need for more affordable housing. Mayor Morden and City Council have expressed interest in receiving proposals for townhomes and condos, and are looking to provide incentives in the form of density bonuses to build more rental properties. In order to support these projects, the city is currently working to streamline approval and permitting processes to bring housing to market faster.

Ultimately, Mayor Morden is sharing a message, and that message is that Maple Ridge is open for business. Now known as one of the fastest growing communities in the Lower Mainland, Maple Ridge is evolving and steps are being taken to ensure that the needs of the current population as well as the influx of new residents are being met.

The city has a solid Official Community Plan, and the Mayor and City Council are making working with landowners simple by ensuring that processes are clear and easy to navigate. These strategic moves are positioning Maple Ridge as a community to watch, and as a city with a vision for a vibrant and burgeoning future. 

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NEW TAXES, NEW RULES WHAT YOU NEED TO KNOW ABOUT RECENT TAX ADDITIONS

Written by Rick Gendemann, CPA, CA, Partner of Manning Elliott LLP Accountants and Business Advisors

Given the rising concern over the availability of unreasonably priced housing in certain areas of British Columbia, the provincial government has introduced a BC Speculation and Vacancy Tax effective for 2018. According to the NDP Government of BC, these changes were brought in to increase the available residential properties on the market by discouraging absentee owners from leaving their properties vacant and unoccupied. The NDP also hoped that this new tax regime would cool down the high BC real estate values. The City of Vancouver also introduced legislation to deal with vacant homes with their Vacancy Tax which came into effect for 2017. Both of these recent housing affordability tax changes function as an “empty residential properties” tax. Let’s take a closer look at how these new tax rules will impact individuals who own residential properties in BC and Vancouver.

BC SPECULATION AND VACANCY TAX The BC Speculation and Vacancy Tax is effective for 2018, and will apply to any residential property (including homes, condos, apartments and cottages) in BC that is left unoccupied for a specific period of time within a calendar year. The hardest hit areas will be BC’s hottest real estate markets including Vancouver, Victoria, Kelowna and Nanaimo.

Affected Areas

•

Properties used as qualifying long-term rentals (including condos and cottages). For 2018, the property must have been rented at least three months in the year in increments of 30 days or longer. For 2019 and onwards, the property must be rented for at least six months in increments of 30 days or more.

•

Owner exclusions where the owner is:

The Speculation and Vacancy tax applies to unoccupied residential properties within the following areas of BC: •

Metro Vancouver Regional District (excluding Bowen Island and the Village of Lions Bay, and Electoral Area A, except the part of the electoral area that is the UBC and University Endowment Lands)

•

Municipalities within the Capital Regional District (excluding the Gulf Islands and Juan de Fuca)

•

City of Kelowna and City of West Kelowna

–– Away from their home due to medical treatment for themselves, their spouse or minor child

•

City of Nanaimo and District of Lantzville (excluding Protection Island)

–– In a long-term care or supportive care facility

•

City of Abbotsford

•

City of Chilliwack

•

District of Mission

–– In a hospital under medical care

–– A person with a disability –– A spouse who lives apart for work reasons (may be able to claim an additional home) –– A spouse who lives apart for medical reasons (may be able to claim an additional home)

Islands in British Columbia that are accessible only by air or water are excluded. Reserve lands, treaty lands and lands of self-governing Indigenous Nations are also not part of the taxable regions.

“All residential properties would be subject to the BC speculation and vacancy tax unless certain exemptions are met.” The more common exemptions would include: •

Principal residences owned by a Canadian citizen or permanent resident of Canada who is a British Columbia resident for income tax purposes and isn’t part of a satellite family. People who have multiple homes must determine which home is their principal residence. Couples are generally deemed to have one principal residence for the purposes of the tax. (A satellite family is an individual or spousal unit where the majority of their total worldwide income for the year is not reported on a Canadian tax return.)

–– A departing resident of BC who moves out before the end of the year –– Away temporarily for work purposes –– Someone who purchased the property in the year (year of acquisition exemption) •

The registered owner is deceased and the estate is in the process of being administered

•

Owners of property that is under construction or substantial renovation as defined, if reasonable steps are being taken without undue delay to develop or renovate the property

There are further exemptions that can apply for very specific situations. If you do not qualify for the above-noted exemptions, please refer to the legislation to assess if your property is exempt.

What is the Speculation and Vacancy Tax Rate?

Are There Tax Credits Available?

The following BC speculation tax rates will apply to the assessed value of the property:

A tax credit is available in certain instances: •

If the Speculation Tax applies and you are a resident of BC (who is not a satellite family member), you will be eligible for a tax credit that is applied against the Speculation Tax.

•

(A satellite family is where a member of the family lives in BC but does not pay BC income taxes. For example, a family member living in BC with an income-earning spouse residing outside of BC.)

Maximum tax credit available is $2,000. This exempts an owner on an otherwise taxable home assessed at up to $400,000, or provides a $2,000 reduction in tax payable on a home assessed above $400,000 (for example, a $500,000 property would only be taxed on $100,000).

•

—

For homeowners with multiple properties, the tax credit will only apply to one property.

•

Foreign owners and satellite families can claim a tax credit equal to 20% of their BC income to reduce the 2% speculation and vacancy tax. The tax credit cannot reduce the tax rate below the rate for an equivalent BC resident (zero on a principal residence or 0.5% on other properties).

•

Non-B.C. resident Canadians will be eligible for a tax credit based on that income claimed in B.C. The tax credit cannot reduce the tax rate below the tax rate for an equivalent BC resident (zero on a principal residence or 0.5% on other properties).

•

For the Year 2018, the tax rate is 0.5% of the assessed value of the property on July 31, 2018

•

For the Year 2019 and onwards, the tax rates are:

2% 1%

for foreign owners and satellite families

for specified Canadian citizens or specified permanent resident of Canada

—

.5%

for Canadian citizens or permanent residents who live in BC who are not a satellite family member (exemptions apply for properties valued at less than $400,000.)

Administration and Filing Matters All residential property owners in a designated taxable region have to complete an annual declaration to claim any relevant exemptions. Where there are multiple owners of a home, a declaration must be completed by each owner. If you own residential property in a designated taxable region, the Province will send you a speculation and vacancy tax declaration letter telling you how to complete your declaration. The letter will list all the residential properties you own. You need to complete your declaration even if you think you might not be eligible for an exemption. The annual deadline to complete the declaration is March 31. The tax payable will be due by July 2, 2019 for the 2018 taxation year.

VANCOUVER VACANCY TAX In light of the growing concern in Vancouver over the availability of unreasonably priced housing, the City of Vancouver implemented an Empty Residential Properties Tax (Vacancy Tax) effective for 2017. According to the City of Vancouver, the objective of this Vacancy Tax was to return empty or under-used properties to use as long-term rental homes for people who live and work in Vancouver.

What is the Vacancy Tax rate? •

Residential properties that are deemed to be vacant will be charged a tax of 1% of the property’s assessed taxable value. There is a late payment penalty of 5% as well as daily interest on arrears.

Which properties are subject to the Vacancy Tax? All residential properties in the City of Vancouver are subject to the Vacancy Tax as of 2017, unless one of the following exemptions is met: •

The residential property is used as a principal residence by the owner, his/her family member or friend, or other permitted occupier for at least six months each calendar year.

•

The residential property is rented for at least six months of the current year, in periods of 30 consecutive days or more.

Are there other Vacancy Tax exemptions available? There are several exemptions available for the Vacancy Tax for specific situations that include: •

The property was not your principal residence, but you occupied it for at least 180 days of the year because you worked in the City of Vancouver. This doesn’t apply if the property was only used as a place of work and not a residence.

•

The property was unoccupied for more than 180 days because you or your tenant were undergoing medical care, residing in a hospital or a supportive care facility.

•

The property was unoccupied for more than 180 days because the registered owner is deceased and the estate hasn’t been administered.

•

If there was a transfer of legal ownership during the tax year, the property will not be subject to the tax; however, the current registered owner is still required to submit a property status declaration.

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Your property was unoccupied for more than 180 days because the property was undergoing renovations or the property is vacant and part of a phased development

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The property was unoccupied for more than 180 days because of strata bylaw restrictions.

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The property was unoccupied for more than 180 days because the property was under a court order.

How is the Vacancy Tax enforced? Residential property owners in the City of Vancouver must make a property status declaration each year, otherwise, the property will be deemed vacant. The declaration for 2018 was due on February 4, 2019.

How is the Vacancy Tax enforced on residential properties which are sold/purchased during the year? For purchases and sales of residential properties that are closing during the declaration period (November to February), the property status declarations should be made by the seller prior to the transfer of property. Buyers should request the completed and filed property status declaration, as well as proof of payment of the Vacancy Tax if it applies, as the registered owner is responsible for paying the Vacancy Tax. If the seller hasn’t paid for the previous year, the buyer will be responsible for the tax and any related interest.

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Failure to make a declaration by the due date will result in a $250 penalty.

What are some of the Vancouver Vacancy Tax issues you should be concerned with?

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False declarations can result in a fine up to $10,000 per day, in addition to payment of the tax.

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Only one owner is required to make the declaration on jointly owned properties residence

1. A property occupied by the owner but is not his/her principal residence would be subject to the Vacancy Tax unless the property is rented for at least 180 days.

Declarations can be selected for audit and the property owner will be required to submit sufficient evidence. A property may be audited up to two years after the declaration has been filed.

2. If a property is listed for rent, but the owner can’t find a tenant, the Vacancy Tax will apply, as owners are expected to reduce rent until a tenant is found. 3. If a property is listed for sale and sits empty for more than 180 days, the Vacancy Tax will apply. 4. The Vancouver Vacancy Tax is in addition to the BC Speculation and Vacancy Tax. If you own residential property in Vancouver, you may be subject to both taxes. 

Rick Gendemann, CPA, CA // Partner with Manning Elliott LLP. Rick has developed an extensive background providing accounting, tax, business advisory, estate and succession planning services for privately held businesses. His practice focuses on businesses operating in the manufacturing and food processing, agriculture, real estate development, wholesale, distribution and R & D industry sectors. Rick’s practice also includes a focus on delivering income tax consulting and tax planning services to owner-managed businesses and their shareholders. Rick can be reached at (604) 557-5760 or rickg@manningelliott.com. The above content is believed to be accurate as of the date of posting. Canadian tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained herein.

What’s Happening in Land Development in 2019? We asked real estate lawyer and partner at McQuarrie, Jason Sandhu, our top five burning questions. 1. Beneficial ownership disclosures – how is it different now than before the 2018 budget release? In its continued efforts to increase transparency with real estate transactions and ownership in British Columbia, the Minister of Finance has tabled, in the 2018 Provincial Budget, a proposal for a new registry to record beneficial ownership (the “new Registry”), together with the proposed enactment of the Land Owner Transparency Act (“LOTA”). The primary purpose of the new Registry and LOTA will be to further the government’s initiatives to address concerns such as money laundering, tax evasion and fraud, by establishing a public record beneficial ownership of property. The inception of the new Registry will require all beneficial owners, whether shareholders, trust beneficiaries or members of partnerships, to be disclosed in a database available to the general public and governmental authorities.

2. Bare Trust’s to avoid PTT, what is the status of that? Is there something coming up in 2019? Bare Trusts have been used in real estate transactions and business ventures in order to shield beneficial owners from direct liabilities arising from the use and ownership of real property, as well as, for comprehensive tax planning purposes. In recent years, the popularity of Bare Trusts in real estate transactions has grown, as this structure permits the transfer of beneficial ownership of the property without the need to convey legal title of such property, thereby not triggering the payment of Property Transfer Tax, which is currently only payable on the transfer of legal title. We anticipate that, with the introduction of LOTA and the new Registry in late 2019, the Minister of Finance will require a purchaser or transferee of beneficial interest real property to also pay Property Transfer Tax. In anticipation of this modification to the taxation, the Minister of Finance has previously revised the PTT Election Forms to require purchasers to disclose any bare trust interest in land. We would assume that these past declarations will be eventually filed with the new Registry.

3. Does selling a tenanted property add complexity to a sale on the legal side? The existence of a tenancy may complicate a transaction, whether it is a defiant tenant refusing to vacate prior to closing or the difficulty of confirming the exact terms and conditions of the rental arrangement, as the agreement may include both written and oral terms. Tenancy concerns will also vary between commercial tenancies and residential tenancies. In British Columbia, residential tenancies are governed by the Residential Tenancy Act (the “RTA”) and administered by the Director and the Residential Tenancy Branch. The RTA provides provisions for both landlords and tenants with respect to termination of an existing tenancy. However, many buyers and sellers become frustrated with the procedures and protocols required to not only end a tenancy, but to cause a tenant to vacate property, which may be costly and time-consuming.

Jason Sandhu Partner

It is imperative that any tenancy be reviewed prior to the completion of the transaction, whether the buyer is assuming the existing tenancy or whether the seller is contractually obligated to terminate the tenancy and provide vacant possession on the possession date. The tenancy may also affect the requirements and conditions of purchasers’ lenders, as lenders will require estoppel certificates and other documentation. A proper assessment early into the due diligence period will assist in identifying potential concerns as the

McQuarrie Hunter LLP

transaction proceeds to fruition.

5. What is the most common concern/question from owners beginning to explore a sale of a property?

4. What legal changes have been implemented within the past year to better protect sellers in a real estate transaction? (changes to agency, disclosure, etc.)

In light of the recent market conditions, the most prevalent concern when entering into a contract of purchase and sale for a seller is the legal liabilities and consequences if the buyer breaches the contract and fails to purchase the property.

Firstly, the standard residential sales contracts now require the Seller to consent to an assignment of the contract by a buyer, unless the buyer agrees to delete this requirement. Secondly, the contracts now require that any assignment fee payable by an assignee is to be paid to the Seller, unless the Seller agrees to waive such right. This provides assurance that the Seller has the right to receive the fair market price for the Seller’s property. Another significant change is that real estate agents are no longer permitted to enter into a dual agency with contracting parties, wherein, a single realtor acts for both the buyer and the seller, save and except in specific situations. In fact, parties are encouraged to retain their own realtor to ensure the party understands their rights and obligations in the transaction.

For example, a residential seller may be downsizing to a smaller home and in order to facilitate a smooth transition, the sale of their existing home and the purchase of their new property may be scheduled to occur simultaneously or in short order thereafter. This may pose not only a logistical challenge, as two separate transactions will need to be completed, but also pose a legal risk to a seller, as he or she may be relying on the sale proceeds of their home to purchase the new property. If the buyer is unable to complete as scheduled, the Seller may not have sufficient funds to complete the purchase of their new property. The Seller would potentially lose their deposit, but also be susceptible to other losses or damages suffered by the seller of the second property.  McQuarrie Hunter LLP is a multi-practice, Surrey-based law firm that serves the needs of businesses, individuals and institutions in the Lower Mainland and throughout B.C. Visit: www.mquarrie.com

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Take your business a step further Join the Surrey Board of Trade and experience the value of membership. Let’s build your successful business together.

The Surrey Board of Trade attracts & supports business in Surrey.

Anita Huberman

Chief Executive Officer

Indra Bhan

Chief Operating Officer

Surrey Board of Trade offers vital business resources, group benefits for you and your employees, business education, expertise, networking opportunities and advocacy to help your business grow and succeed! Contact us at 604.581.7130 or check us out online at businessinsurrey.com

VARING IN THE COMMUNITY

It’s not only our success that brings us gratification, it’s the pleasure of knowing that our clients have been served well. In turn, we’re able to give back to the communities who support us. At Varing Marketing Group, we are fortunate to work with outstanding individuals who keep us inspired and humble. Alongside our daily business activities, we have a genuine interest in giving to and participating in programs supporting youth in education and health. Our future as a company excites us, and we want to ensure the kids in our community share that same excitement about their futures.

COMMUNITY MEMBERS OF

FEATURED IN THE MEDIA

PROUD SPONSORS OF

NOTABLE TRANSACTIONS e.

. St

BEN

SLESSE RD.

LANGLEY // LATIMER

CHILLIWACK // RYDER LAKE

SURREY // TYNEHEAD

2 ACRES

261.6 ACRES

2 ACRES

7894 197 ST.

50800 BENCH RD.

18012 92 AVE.

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11 A

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268

St.

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267

nsm

St.

108

MAPLE RIDGE // THORNHILL

LANGLEY // ALDERGROVE

MISSION // MISSION CORE

10 ACRES

7.41 ACRES

3.27 ACRES

25180 108 AVE.

LOT 2 267 ST.

7784 DUNSMUIR ST.

Y LE S NG ENT RE A L EV NT CE

ve.

A 24

2 20

17 .

SURREY // GRANDVIEW AREA 4

SURREY // ROSEMARY HEIGHTS

LANGLEY // LATIMER

9.4 ACRES

5.583 ACRES

2.49 ACRES

17874 24 AVE.

3965 156 ST.

7742 202A ST.

2019

FROM

QX50 $

44,490*

2019

QX80

FROM

78,350*

OpenRoad Infiniti Langley 5995 Collection Drive, Langley (5 minutes from Willowbrook Shopping Centre)

604-532-8888 OpenRoadInfiniti.ca

Moe Khan General Manager

* Selling price of a new 2019 QX50/QX80 is $44,490/$78,350. Freight and PDE, all applicable levies and charges, license, registration, insurance, duties, applicable taxes and Doc Fee of $395 are extra. Retailer order/trade may be necessary. Vehicle and wheels may not be exactly as shown. See OpenRoad Infiniti for details.

CORE VALUE:

NO. 4

604.565.DIRT WESELLDIRT.CA (3478)