B.C.’s roaring real estate market is helping the province balance the budget – but some wealthy buyers are using a loophole to avoid paying up to millions of dollars on the property transfer tax.

The property transfer tax is one per cent on the first $200,000, two per cent up to $2 million and three per cent on the remainder. Most first-time homebuyer are exempt.

The tax is expected to bring in $1.5-billion of revenue in 2015/2016 alone.

But there’s a catch: some property owners are using bare trusts to avoid paying the tax. The property is owned by a corporation and the owners may change, but the company’s name remains the same on the title - meaning tax isn’t owed.

This was the case with the recent sale of 1065 Nelson Street in Vancouver, purchased by a company called Nelson Street Residence from Suncom for $68-million.

The company’s director Shan Gao avoided paying the property transfer tax of more than $2-million because the name on the title was left the same.

This practice is common in commercial real estate – and perfectly legal. Sources have told CTV News that the strategy of avoiding the tax is being used with high-end residential sales as well.

Green Party MLA Andrew Weaver has been concerned about the bare trust for the last two years, highlighting the need to fix the loophole.

He says people who are very wealthy or investing from abroad would be recommended by astute accountants to purchase their house using the loophole.

“Every time most people buy and sell a house, they’re paying property transfer tax. It’s only the wealthy and the wise who would actually buy in bare trust,” said Weaver.

“As a society, if every single person created a bare trust and bought every property in a bare trust there would be no more property transfer tax collected in British Columbia… there’s no reason not to change it.”

But saving money may not be the only reason a buyer would choose to set up a bare trust.

Accountant Arthur Azana says bare trusts could become more common with foreign buyers as B.C. plans legislation requiring property purchasers to disclose whether or not they are Canadian citizens.

“I can [see] such arrangements becoming more prevalent,” Azana said in an email to CTV News. “Especially if the next step is something like an extra tax, higher property taxes on non-resident and non-citizen owned properties.”

Finance Minister Mike de Jong says the government is working on closing the loophole but it could take months.

“We're working to ensure a reliable data in case of bare trusts, a better sense of the degree to which it is used as a mechanism for avoiding taxation,” de Jong said. “It’s something we have to be alive to, particularly as we make shifts in other forms of taxation policies.”

With files from CTV Vancouver’s Mi-Jung Lee