Real Estate News January 2023 

 If you are in the market for a new home in 2023, we would suggest that you familiarize yourself with the following new regulations. 

1. Home Buyer Rescission Period 

As of January 3, 2023 the new Home Buyer Rescission Period (otherwise referred to as the ‘Cooling Off Period’), become a mandatory step in most residential real estate transactions across B.C.

Prospective purchasers of most property types now have a three-day window after their offer is accepted to withdraw from a purchase agreement no questions asked. This rescission period is separate from any condition precedents contained in the offer, such as inspection, approval for financing or other conditions.

This period will include a rescission fee of 0.25% of the purchase price, or $250 for every $100,000, for those who choose to back out of a deal within those first 3 days after acceptance. For example, if the purchaser exercises the right of rescission on a $1-million home, they would be required to pay $2,500 to the seller within 14 days. 

2. Prohibition on the Purchase of Residential Property by Non-Canadians Act  (Foreign Buyer Ban) 

As of January 1, 2023, the Federal Government of Canada has implemented a two-year ban on foreign ownership of residential property across Canada. Properties that fall under this category include:

• A detached house or similar building
• Semi-detached house, row house unit, residential condominium unit or similar premises 
• Immovable property

This new regulation prohibits property sales to those not classed as a Canadian citizen or permanent resident as well as any commercial enterprises that are not incorporated under Canadian Law.

The Government has however announced certain exemptions to this new ruling. Some of these include:

• A temporary resident within the meaning of the Immigration and Refugee Protection Act who satisfies prescribed conditions
• A non-Canadian who buys residential property with a Canadian spouse or common-law partner if the spouse or common-law partner is a Canadian citizen or permanent resident
• A person registered as an Indian under the Indian Act 
• Selected rural geographical locations. Here in the Kootenays we do have area that are part of the ban such as Nelson, Trail and Rossland and we have many areas that are exempt. Contact us for more info on specific locations.  

3. Anti-Flipping Tax  

As of January 1, 2023, the Federal Government has imposed a new tax regulation on any profits generated from a sale of property that has been owned for less than 12 months. House flippers, beware!

This new tax law will disallow the use of the Principal Residence Exemption (PRE), and any gain realized from the sale will be taxed as business income, not as a capital gain. Homeowners will need to prove to the Canada Revenue Agency (CRA) of any exception.

This new measure comes into effect to help cool off demand throughout the market, but also comes with potential exceptions such as death, breakdown of a relationship, serious illness or disability, relocation for work, or insolvency/bankruptcy.