This or That

Taxes

Yes we have them!

Around this part of the world known as British Columbia we have the infamous Property Transfer Tax. With few exceptions, this tax is paid by the purchaser of the property upon transfer of title.

Now if you think this tax is an eye opener, as a home owner, consider what you would pay if you lived France.

France

Eiffel Construction Stages – Courtesy Time Inc

According to the New York Times who quotes Christophe Dutertre a lawyer specializing in French civil law – “nationality does play a role if a homeowner chooses to sell, Mr. Dutertre said. Anyone who has owned a property less than 15 years must pay a capital gains tax: 27 percent for French residents, 16 percent for non-French European Union residents and 33.5 percent for non-European Union residents.”

A Bargain Maybe

While no tax is preferred, depending on perspective, our property purchase tax may be a bargain.

Tax Rates

The amount of tax due depends on the fair market value of the property that is transferred:

  • * If the fair market value is $200,000 or less, the tax is 1% of the fair market value
  • * If the fair market value is greater than $200,000, the tax is 1% of the fair market value up to $200,000, plus 2% on the portion of the fair market value that is greater than $200,000

Example:

  • * if fair market value of property is $150,000 tax payable is: 1% of $150,000 = $1,500
  • * if fair market value of property is $250,000 tax payable is: 1% of $200,000 = $2,000 plus 2% of $50,000 = $1,000 for total tax payable of $3,000

Pensée

The tax in France is applied to the sale and associated appreciation in market value. The theory as understood, was that it would squelch speculation.

Do you think it would have that effect in B.C. if the Property Purchase Tax was replaced?

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

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*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

Bob Lucas Says:
August 13th, 2010 at 9:11 am

From acquaintances, whether French tax law has affected speculation is unknown. However, I can assure you that property, particularly in Paris is ridiculously expensive by any measure.

jesse Says:
August 13th, 2010 at 9:40 am

If you are an investor there are other taxes in Canada.

August 13th, 2010 at 10:14 am

@jesse
I get that but if you are not an investor don’t you think it’s still a little rich tax wise? The real question is whether it has acted as a deterrent to extreme market fluctuations?

John1 Says:
August 13th, 2010 at 2:04 pm

Begs the question – do the French get a tax break if their property depreciates in value?

August 13th, 2010 at 2:56 pm

@john1
I presume if it falls below predermined levels the tax is reduced but, I’m quite certain there no government benefit to the home owner if the market tumbles. Maybe that has been invented in the US where you just walk away if it suits you.

John1 Says:
August 17th, 2010 at 4:07 pm

“Maybe that has been invented in the US where you just walk away if it suits you.”

In the US today, you don’t just walk away.. you live there for a few months until the bank gets a chance to process your foreclosure, then a more months later you walk away.. 😉

August 17th, 2010 at 4:20 pm

@john1
yes it is often better to keep someone in the house. empty it gets ripped apart and in short order has even less value to the bank.

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