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Québec to identify non-resident property purchasers

Tuesday, 5 March, 2019

The Québec government has issued a draft regulation under which non-resident purchasers of residential properties will be identified in the land registry, stating the citizenship and permanent residency status of such individuals, and the places of origin and residence of companies and trusts.

The draft regulation will amend the Act Respecting Duties on Transfers of Immovables, and is scheduled to come into force on October 1, 2020, with consultation open for the 45 days following the issue of the draft.

Experts have questioned if the regulation is likely to be followed by extra property taxes on non-resident owners, as has already happened in other Canadian provinces.

Ontario’s non-resident speculation tax represents 15 percent of property acquisition price for non-residents of Canada, while British Columbia (BC) requires non-residents of the province to pay an annual speculation and vacancy tax of up to 2 percent of the value of any residential property bought. BC additionally requires non-residents to pay 20 percent of the value of a residential property in certain areas of the province under the additional property transfer tax on foreign buyers.

The news of the draft regulation comes as the BC government launches a pre-sale register to crack down on real estate tax evasion, through the Condo and Strata Assignment Integrity Register (CSAIR).

CSAIR requires developers to collect and report information including the identity and citizenship of all parties to an assignment, enabling the BC government to prevent pre-sale “condo flipping” from taking place and to ensure that those people assigning condos are paying the appropriate income tax, capital gains and property transfer tax.

“For too long, speculators and tax evaders have been taking advantage of loopholes in our real estate market, driving up prices and shutting British Columbians out of the market,” said Carole James, Minister of Finance. “With this new register, we are leading the country in real estate transparency and taking real action to moderate the condo market.”

James Cohen, Transparency International Canada and Canadians for Tax Fairness, said of CSAIR: “The condo and strata assignment register is a step in the right direction by creating another tool for transparency and closing tax evasion loopholes in the real estate market. We hope to see the BC government continue this very important path of shining a light on real estate, particularly bringing transparency to anonymous beneficial owners of corporations and trusts, so they are not a soft target for tax evaders and money launderers.”

Developers’ first quarterly report to CSAIR is due by April 30, 2019.

Sources