FOREIGN BUYERS BAN AMENDED AND UNDERUSED HOUSING TAX PAYMENTS DEFERRED

After announcing new legislation that would affect property owners in Sun Peaks, the Canadian federal government is making changes.

The federal government has amended legislation barring non-Canadians from purchasing residential property and is deferring tax payments and interest for the Underused Housing Tax (UHT) until Oct. 31, 2023.

The Prohibition on the Purchase of Residential Property by Non-Canadians Act began on Jan. 1, 2023 and was amended on March 27, 2023. The original legislation prevented non-Canadians from purchasing property in Canada for two years.

As of March 27, amendments to the legislation have repealed prohibitions against non-Canadians purchasing land zoned for residential and mixed use.

The update also provides an exception for non-Canadians purchasing property for housing development, increases the foreign corporate ownership threshold and supports those with work permits who want to purchase a home.

The amendments will allow the federal government to “provide greater flexibility to newcomers and businesses seeking to contribute to Canada,” Ahmed Hussen, minister of housing and diversity and inclusion said in a media release.

The changes means businesses abroad and nonCanadians can buy property to develop and can buy vacant land zoned for residential and mixed use.

Non-Canadians with a work permit or people authorized to work in the country can buy property if they don't already own a property in Canada. They are required to have at least 183 days left on their work permit in order to buy property.

A press release from the Canada Mortgage and Housing Corporation (CMHC) explained the federal government made the changes to ensure newcomers are able to purchase homes and businesses can build homes to increase Canada’s housing supply.

The CMHC release added the legislation will hopefully still reduce “speculative investment by foreign investors.” The bill was initially brought into law to reduce foreign speculation in the Canadian housing market.

Underused Housing Tax payments deferred

The UHT went into effect last year and requires non-resident homeowners to pay a tax of one per cent assessed property value unless they meet certain exemptions.

Properties in Sun Peaks are exempt from the one per cent tax according to the federal government’s designation tool. Canadian citizens and permanent residents do not have to file while non-Canadians are required to file the form.

A property owner affected by the Underused Housing Tax Act now has until Oct. 31 to pay the tax with waived interest. While the deadline to file the tax form is still April 30, the CRA’s website says having extra time to pay this tax will help ensure people comply.

In an email to SPIN, the Canadian Revenue Agency (CRA) highlighted it is up to individuals to confirm whether their property is exempt or affected. A representative directed individuals or corporations to contact the CRA if they require further assistance.

Local Impact

The changes to non-Canadians’ rights to purchase a home in Canada may be good news for nonCanadians interested in Sun Peaks.

There are individual lots on Mountain View Drive and Lookout Ridge that are vacant and zoned for general residential properties, according to Sun Peaks Mountain Resort Municipality (SPMRM) chief administrative officer Shane Bourke.

Land development is governed by Sun Peaks Resort (SPR) LLP’s Master Development Agreement with the province, and applications to develop vacant land can only be completed by SPR through the existing agreement.

Bourke is unsure if the change means nonCanadians will be able to purchase these homes.

SPIN has reached out to Frank Caputo, Member of Parliament for Kamloops-Thompson-Cariboo for comment. In an email, a member of Caputo’s staff noted the MP is aware of the housing tax and purchase ban but did not provide further comment.

According to data from Statistics Canada, 16.5 per cent of of residential properties in Sun Peaks were owned by non-residents in 2017.

Sun Peaks Mountain Resort Municipality Mayor Al Raine says the deferral of tax payments for the UHT doesn’t address local issues.

Raine added the UHT does not account for properties used for short-term rentals. Instead, a property must be occupied by the owner, their primary family or a tenant for more than 28 days in a year to be exempt from the tax.

“I think the reason why they don't want to recognize short term rentals is this battle they're having in cities with short term rentals taking away from the housing supply … [but] the sole tourism premise of Sun Peaks is based on having a large supply of short term rental properties for tourists. None of that is recognized.”

Kit Kuhn is a member of the non-resident advisory committee and has owned property in Sun Peaks for 17 years. He found out about the UHT through the committee and wants to see better consultation with municipalities when changes like the UHT are implemented.

“[The federal government] should also be saying, ‘okay, how are we going to get the word out before we pass this,’” Kuhn said.

He added having a structured communication plan with municipalities ahead of implementation would help the government avoid scrambling to inform those impacted by this legislation.

“They've already extended the time because, obviously, they figured out that people don't know about it.”