BC NDP fails to deliver on real estate tax loophole pledge

(Image courtesy CBC.)

The BC NDP government is facing criticism for failing to act on a commitment to close a major real estate tax loophole, despite years of signalling support for reform.

The loophole allows buyers to avoid paying property transfer tax (PTT) by purchasing shares in a company that owns a property instead of buying the property directly. Because ownership does not change in the land title system, the transaction does not trigger the tax.

The scale of the gap is illustrated by a high-profile Vancouver deal last year. Amancio Ortega, the billionaire founder of Zara, acquired a downtown retail and office property valued at roughly $1.2 billion by buying the company that held the asset. By structuring the purchase this way, the transaction did not incur property transfer tax, avoiding what would otherwise have been a levy in the tens of millions of dollars.

For typical buyers, there is no such option. Purchasing a home in British Columbia routinely comes with a significant tax bill, often adding thousands to the cost of entry.

The approach used in the Ortega deal is described as a routine strategy in the province’s real estate sector. Ontario addressed similar arrangements decades ago by taxing transfers of beneficial ownership, but British Columbia has not made comparable changes.

(When Zara founder Amancio Ortega acquired Vancouver’s Post office redevelopment for $1.2 billion, the deal was structured in a way that did not trigger property transfer tax. Image courtesy PCL Construction.)

That creates a political vulnerability for the NDP. While in opposition, the party introduced legislation aimed at closing the loophole. More recently, it agreed in a 2025 cooperation accord with the BC Greens to eliminate it as part of a set of policy commitments.

That pledge has not been carried out. The measure was not included in the latest provincial budget and does not appear in the finance minister’s mandate letter.

The issue has also been tested in court. Judges in British Columbia have found that structuring transactions to avoid PTT through share sales is a common and lawful practice under existing rules. In the same case, the court noted that the province could address the issue through regulation under current legislation, without necessarily passing a new law.

Critics argue the result is a system where large investors can sidestep a tax that applies to ordinary buyers. The Urban Development Institute, which represents developers, raised concerns with the government about potential changes and later listed the lack of reform among its policy wins.

The Ministry of Finance has said it continues to review the property transfer tax system and has not ruled out future changes. For now, however, the loophole remains in place — along with a commitment to close it that has yet to be fulfilled.