In an effort to address housing affordability in British Columbia, and catch unreported tax revenues in the condo market, the provincial government has introduced a real estate condo registry. The condo registry was created to regulate pre-sale property flipping and help reduce tax evasion in the B.C. real estate market. Our real estate and construction team shares an overview of what pre-sale property owners in B.C. can expect this year and onward. Other provinces have also expressed interest in the policy and will likely see a similar change in the future.
Condo and Strata Assignment Integrity Register (CSAIR)
The Condo and Strata Assignment Integrity Register (CSAIR) is a database for assignments of purchase agreements of all residential condo and strata lots in B.C., including both pre-sale lots and completed lots. Strata properties are commonly known in B.C. as housing under a strata corporation. They primarily include condominiums, duplexes, townhouses, and fractional vacation properties. However, they can also include single-family homes under a strata corporation subdivision.[i]
A pre-sale purchase agreement refers to acquiring the right to purchase a condo or strata lot from a developer before the building is completed and registered with the land title office. An assignment is the transfer of the right to purchase the condo or other strata lot. The filing fee per assignment is $195.
The CSAIR captures information about assignments of purchase agreements of condos and other strata lots, including certain information on the assignors and assignees. Developers are responsible for collecting and reporting this information on all assignments of purchase agreements entered into on or after January 1, 2019. Moreover, this information, along with any new updates, is required to be filed by the developer in a quarterly report.
Information in the CSAIR is kept “confidential” by the Ministry of Finance, but is shared with other agencies, such as the Office of the Superintendent of Real Estate and Canada Revenue Agency (CRA), to ensure assignment transactions are reported and the appropriate taxes assessed. The information collected is also used to inform future housing and tax policy.
Addressing past challenges
Prior to the introduction of the condo registry, many owners doing flips of their pre-sale properties before the completion of their construction would not disclose these exchanges, making it impossible to know how many of these transactions occurred annually. In many cases, owners weren’t paying all the appropriate income taxes or property transfer taxes. All this has been a contributing factor to rising real estate prices and has enabled tax evasion across the province, or allowed people to escape taxes unknowingly. Given the CRA’s ongoing focus on the condo market with their audit teams, the new B.C. registry will allow them to further crack down on uneducated condo flippers in the B.C. market who ignore already established rules.
Ensuring future compliance
The registry was introduced to avoid such issues in the future. Flipping properties, no matter what stage of construction they’re in, is a popular practice in the real estate industry. B.C. is the first province in Canada to launch this type of condo registry. As previously mentioned, other provinces have expressed similar interests and are likely to follow suit in the future.
BDO offers support in a multitude of real estate accounting services. For any additional information on the new registry, please reach out to our team.
[i] Government of B.C., “Different Kinds of Strata,” gov.bc.ca, accessed April 22, 2019, https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/understanding-stratas/kinds-of-stratas
The Canadian Press, “First-of-its-kind registry in B.C. targets under-the-radar condo flippers,” CBC News, February 25, 2019, https://www.cbc.ca/news/canada/british-columbia/condo-and-strata-assignment-integrity-register-1.5032714
Tags: audit, condos