Major changes are underway for B.C.’s real estate market, specifically in Greater Vancouver where housing affordability has been a consistent issue. With revisions made to B.C.’s Property Transfer Tax (PTT), it is evident that affordability is at the forefront of the Provincial government’s mind.
New homes costing $750,000 or less are eligible to be exempt from property transfer tax, and homes priced up to $800,000 are eligible for partial exemption. To receive this exemption, one must be a Canadian citizen or permanent resident. To ensure that investment properties are still fully taxed, one must also reside in the purchased home for at least one year.
Additionally, land that is purchased with the intention of building a home will be eligible for a full PTT refund. In addition to the citizenship requirement, it is also required that construction is completed and the principal resident moves into the property within a year of the initial purchase. However, this particular incentive may fall short in aiding the market, due to project delays and the ample time it takes to process the applications for a building project.
With the stipulation that home owners must be citizens or permanent residents, individuals must identify as one of the two when registering an eligible property. Furthermore, individuals who are not citizens or permanent residents must declare their citizenship upon registration. This new information will serve a dual purpose, as it will also allow the government to assess if foreign investment has any bearing on affordability in B.C.
To compensate for this new exemption, property valued over $2 million will face a PTT of 3%, which will conceivably earn the government $75 million extra each fiscal year in tax dollars. As B.C.’s population and economy grow, so does the demand for affordable housing. However, the price for a single family home has been steadily increasing over the past five years, despite a distinct need for the opposite to occur. Consequently, the government announced that over the next five years $355 million will be dedicated to construction over 2000 affordable housing units for low-income earners.