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BC 2024 Budget: New Housing Measures

BC 2024 Budget: New Housing Measures
housing measures from the BC 2024 budget

The BC 2024 budget, released on February 22, contains several real-estate related measures to tackle the BC housing crisis. The BC Home Flipping Tax is meant to discourage speculation, while the threshold increases for the First Time Buyers Property Transfer Tax (PTT) Exemption and the Newly Built Home PTT Exemption are intended to help with housing affordability.

BC Home Flipping Tax

The BC Home Flipping Tax is a 20% tax levied on homeowners who sell within the first year of purchase. For those who sell within the second year, the tax will gradually decrease until it reaches zero just past the 2 year mark. The tax applies to residential properties and assignments of purchase contracts and is in addition to all other provincial or federal taxes that are imposed upon the sale of a property, including the Federal Anti-Flipping Tax.

The BC Home Flipping Tax is still subject to legislative approval. However, if passed, it will come into effect on January 1, 2025. If you bought your home before this date, sell it after January 1, 2025 but still within two years of purchase you will need to pay at least some portion of the tax.

If you have to sell within the 2-year period because of life circumstances such as divorce, disability, involuntary job loss or relocation for work, you may be exempt from paying the tax.

As always, it’s best to confirm eligibility for any/all possible exemptions with the appropriate government department and/or a B.C. residential lawyer and/or notary.

Will The Home Flipping Tax Have The Intended Effect?

According to the Government, the tax will generate $43 million in its first year which is to go towards building affordable housing. Industry experts aren’t so sure the tax revenue will be that substantial, since flipping doesn’t account for many real estate transactions in BC. For example, only about 10% of the real estate sales in Vancouver, sell within 2 years of purchase. Sellers who don’t have to sell for personal reasons, many of whom would be exempt from the tax anyway, will simply delay the sale of the property.

If people aren’t selling, there is also the danger that available housing inventory could shrink, further limiting the Government’s revenue from real estate by reducing the amount they get from the PTT. The tax could backfire on the goal to increase affordability and availability as well. If the amount of available inventory is reduced because people aren’t selling as often, home prices may increase.

There are many moving parts and time will tell!

First Time Buyer Property Transfer Tax Exemption

The property transfer tax (PTT) is paid by the buyer of a home when the title is registered and transferred. It can end up adding quite a bit to the price of a home. For example, if the fair market value of the home you are buying is $750,000, and you don’t have an exemption, you would be required to pay $13,000 for the PTT.

The PTT exemption for first time buyers is intended to increase the ability of first time buyers to own their own home. Effective April 1, 2024, the PPT exemption threshold for first time buyers will be increased to $835,000 for a primary residence. It is important to note that this is not a full exemption. 

Rather, it means that if the property has a fair market value of $835,000 or less, as a first time buyer, you will be exempt from paying the PTT on $500,000 of the price and will need to pay on the remaining amount up to $835,000. You could be eligible for a partial exemption if the price of the home is between $835,000 and $860,000.

As always, it’s best to confirm eligibility for any/all possible exemptions with the appropriate government department and/or a B.C. residential lawyer and/or notary.

Newly Built Home Property Transfer Tax Exemption

As of April 1, 2024, if you buy a newly built home in BC, and its fair market value is $1,100,000 or less, you could be eligible for a PTT exemption. If the fair market value is a bit over that  — up to $1,150,000 — you could be eligible for a partial exemption. The home must be used as your principal residence, and be 0.5 hectares (1.24 acres) or smaller. 

There are occupancy requirements as well. You must move into your home within 92 days of the date the property was registered at the Land Title Office, and continue to live there for the remainder of the year.

As always, it’s best to confirm eligibility for any/all possible exemptions with the appropriate government department and/or a B.C. residential lawyer and/or notary.

Are You Impacted By These New Measures?

Will these PTT exemptions make buying a home more feasible for you? Does the proposed Home Flipping Tax put a crimp in your plans? Give us a call and we can crunch the numbers together! 

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