Ron Usher is a lawyer, Commissioned Notary Public, and SFU Visiting Professor – Property Law.
A modest proposal for the steps needed to collect accurate, actionable information on B.C. real estate ownership and taxation.
The problem of housing affordability is, of course, complex and multivariate.
There are many conflicting reports and no shortage of opinions on the nature of ownership in the “VanRe” housing market.
The reality is that there is not a good base of information. There are many ideas on what controls – or not – are needed regarding the purchase of housing.
What we do need is accurate information on the acquisition and disposition of interests in real estate.
The current system of “self-reporting” at the time of disposition is not working. The CRA did not enforce it for many years. Confusing requirements impose significant burdens on the wrong parties. For example, the recent v. 29 of the Property Transfer Tax Form requires buyers to certify the tax residency of sellers – who they most often have never met. This problem is compounded by the complexity of our laws around tax residency.
So what is needed to collect accurate, actionable data for both tax collection and the formation of public policy?
We need at least three innovative measures to be put in place immediately. The details of how to implement the recommendations below will need significant and broad consultation.
- On every acquisition of an interest in BC real estate, the buyer must complete and file a “Notice of Acquisition,” to be sworn and submitted at the time of land title office (“LTO”) submissions. The notice would include identifying information, tax details (SIN, tax residency, etc.), and disclosure of any “beneficial interests” if they vary from the “legal interest” that is registered. This requirement could also apply to private (unregulated) mortgage lenders as mortgages are an “interest in land.”
It should be noted that in B.C. real estate held in the name of a trustee already requires the submission of the trust document. The document is publically available and shows the beneficiaries of the trust.
- On every disposition of an interest in real estate, the seller must submit a mandatory sworn “Notice of Disposition” with similar information. Just as a land title filing now requires a Property Transfer Tax form, the notices from the buyer and seller would be required with every change of ownership submission to the LTO.
- We also need a one-time “census” of all existing property holdings, with substantial tax penalties for failure to file.
We may also need this to apply to other “dispositions of interests in or rights to acquire interests in land.” This could be done by requiring:
- A “notice of change of beneficial ownership” to deal with both “bare trusts” and the sale of the ownership of companies holding land. Currently, both of these quite legal procedures do not attract Property Transfer Tax and possibly avoid Income Tax as no LTO submission is required.
- A registry of pre-sale contracts and assignments of those contracts. This “acquisition or assignment notice” would also apply to all assignments of real estate contracts, not just new development contracts.
We need to remove the burdens that are placed on buyers by having each party file their own sworn documents, fully respecting federal and provincial privacy laws and allowing for the full collection of provincial and federal income taxes.
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