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Olive Crane gives notice that she will ask the Minister responsible for Finance the following questions:
Date Submitted : November 13, 2014
If a former Islander who has lived in the USA for almost 15 years, and who has renounced tax ties to Canada in 2000/0, and closed bank accounts, wants to buy a plot of land in PEl, are they subject to the "foreigners"extra tax during purchase, or for the annual taxes? If the former Islander ever decides to return to PEl, how long does it take for any "foreigner" status continue? As soon as the former Islander returns are they taxed on their land like all other Islanders?
Date answered : December 10, 2014Printable PDF - 64502_answer.pdf
There is no "foreigners' extra tax” during the purchase of real property or added to the annual provincial property taxes on real property.
The only tax levied on the purchase of real property in PEI is the land transfer tax. This tax is 1% of the greater of the consideration paid or the current assessed value of the real property. This tax applies to all purchasers whether resident or non-resident.
The provincial property tax rate on real property is $1.50 per $100 of assessment for all taxpayers, resident and non-resident. The Province does not raise a special tax on non-resident property owners. However non-residents of PEI, regardless of where they reside, are not eligible for the provincial tax credit.
The provincial tax credit is a program where a person who resides in PEI for 183 days or more in a calendar year is eligible for the provincial tax credit of $0.50 per $100 of non-commercial assessment.
When a person takes up residence in PEI and purchases real property, they can apply for the provincial tax credit after residing in PEI for 183 days. When approved, the provincial tax credit is applied back to the date they took up residence in PEI.
In addition to the above credit annual increases in taxable property assessment on owner occupied residential properties are limited to increases in the CPI for PEI for the preceding year. If a resident taxpayer in PEI resides in residential real property that they own, they are eligible for the program which limits increases in annual taxable assessment. This program includes a cottage property owned by an individual provided they do not rent it out to third parties. There is
no requirement for the cottage to be the taxpayer’s principle residence. Properties in this program carry two assessed values - market assessment and taxable assessment. Property tax is levied on the taxable assessment.