New Property Transfer Tax exemptions for first-time buyers and new homes in BC
Written by: Kenneth Chan - Daily Hive
In an effort to improve housing affordability, three major changes are being made to the Government of British Columbia’s Property Transfer Tax (PTT) framework
More specifically, as part of the 2024 provincial budget, three exemption changes are being introduced to the PTT.
Firstly, the threshold to be eligible for the first-time homebuyers’ exemption will be increased from a fair market value of $500,000 to $835,000, with the first $500,000 exempt from the tax. The phase-out range for the complete elimination of the exemption will be $860,000, while properties with a fair market value under $500,000 will be completely exempt. These changes will start on April 1, 2024.
It is estimated these changes for first-time homebuyers will benefit about 14,500 people — twice as many as before — with total savings up to $8,000 from buying their home.
Secondly, the newly built home exemption for purchasers who buy a new home for their principal residence will grow from $750,000 to $1.1 million on the fair market value. Homes with a fair market value between $1.1 million and $1.15 million will see a phase-out range of the exemption. This exemption change will also start on April 1, 2024.
Thirdly, a brand-new PTT exemption will be created for purchases of new qualifying secured purpose-built rental housing buildings, with such buildings required to contain at least four apartment units, be non-stratified, and be used as rentals for at least 10 years, and the residential uses of the building must be entirely used for rental purposes. This specific PTT exemption will apply to transactions for such buildings between January 1, 2025, and December 30, 2030. With home ownership out of reach for many given the elevated home prices, such a policy will help catalyze more “missing middle” rental housing.
The provincial government anticipates these various exemptions will reduce transaction costs by over $100 million per year.
“Because even with a good job and steady savings, it’s tough to put together a down payment these days. As a result, there’s more pressure on the housing market with people renting for longer,” said BC Minister of Finance Katrine Conroy during today’s budget speech.
“As a result, there’s more pressure on the housing market with people renting for longer. But as most people will tell you, every little bit helps. The First-Time Homebuyer Program was designed to provide that financial boost. But the program no longer reflects the realities of today’s housing market.”
According to the provincial government, most first-time homebuyers are under the age of 35, with the increase in threshold expected to mainly benefit individuals buying in urban areas.
Even with the changes, property transfer tax growth is expected to rise by an average of 8.6% annually over the next two fiscal years.
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