24 Jan 2024
Is An Overhaul Of The BC Property Transfer Tax Required?
BC’s Property Transfer Tax was introduced in 1987 as a tax on every real estate purchase in the province when the average price of a home was around $150,000. The tax was and still is levied at a rate of 1% on the first $200,000 of a property’s price, 2% on the fair market value between $200,000 and $2,000,000 and 3% on the portion greater than 3%, anytime changes are made to the title of the property.
While the tax was implemented to target wealthy speculators, thresholds have not been raised to reflect the current price trends; in fact, new thresholds were added. Currently the provincial government collects over $2 billion annually from this tax, with no apparent plans of changing it.
First time home buyers qualify for a full exemption if the property has a fair market value of $500,000 or less, and a partial exemption if it has a fair market value of less than $525,000.
To put all this into perspective, in 2022 there were:
Newly built homes have a newly built home exemption for those who qualify, that reduces or eliminates the amount of property transfer tax paid, when purchasing.
The Real Estate Board of Greater Vancouver (REBGV) has been a long-time advocate of making changes to this tax, to help with affordability and ease the burden of home hunters, especially those looking to purchase a home for the first time.
Specifically, the REBGV is looking for:
While the tax was implemented to target wealthy speculators, thresholds have not been raised to reflect the current price trends; in fact, new thresholds were added. Currently the provincial government collects over $2 billion annually from this tax, with no apparent plans of changing it.
First time home buyers qualify for a full exemption if the property has a fair market value of $500,000 or less, and a partial exemption if it has a fair market value of less than $525,000.
To put all this into perspective, in 2022 there were:
- 4214 townhouses sold, and of those only 75 (1.4%) were sold for less than $525,000.
- 15,597 condos were sold, and of those, 2,239 (14.4%) were sold for less than $525,000.
- 8,396 single detached homes were sold, and of those only 120 (1.4%) were sold for less than $525,000.
Newly built homes have a newly built home exemption for those who qualify, that reduces or eliminates the amount of property transfer tax paid, when purchasing.
The Real Estate Board of Greater Vancouver (REBGV) has been a long-time advocate of making changes to this tax, to help with affordability and ease the burden of home hunters, especially those looking to purchase a home for the first time.
Specifically, the REBGV is looking for:
- An exemption for first time property buyers who buy a home up to $750,000.
- Removing the tax on any home costing less than $75,000.
- Exempting presales. Presales spur speculators is a common misconception however, the other side of the coin is that presales are key to funding new projects.
- Indexing the thresholds to the CPI
- Using the revenue from the tax to assist renters looking to buy.