If you buy an $800,000 condo in British Columbia you will likely pay provincial property transfer tax of about $14,000.

But Spanish billionaire Amancio Ortega, founder of the Zara clothing chain, and his private investment company Pontegadea paid no property transfer tax when he bought the Post office-retail development in downtown Vancouver for $1.2 billion last year.

Instead of buying the building, Ortega bought 8384410 Canada Inc., which owned it. As a result he didn’t have to pay the $36 million in property tax that would otherwise have been levied.

It is routine strategy in the B.C. real estate and development business to establish a bare trustee company and register it in the land title office as the owner of a property. The beneficial owner of the property is whoever owns the shares in that company.

When they want to sell, they sell the shares of the company (and the property) with no change of ownership in the land title office and no property transfer tax payable.

That’s the case in B.C. but not in Ontario, which taxes the transfer of a beneficial interest in land in the same way as property sales transfers. It closed the loophole back in 1989.