EXCITING NEWS: Property transfer tax limit increased
Housing affordability remains a problem in British Columbia, prompting significant adjustments to the Government’s Property Transfer Tax (PTT) framework. As part of the 2024 provincial budget, three key changes are set to take effect, aimed at easing the burden on homebuyers and promoting the construction of new homes.
Expanding First-Time Homebuyers’ Exemption
One of the major adjustments involves raising the threshold for eligibility under the first-time homebuyers’ exemption. Currently, you wont pay PTT on a market value of $500,000, this threshold will increase substantially to $835,000. This means that the initial $500,000 of the property’s value will be exempt from the tax. Additionally, properties valued under $500,000 will enjoy complete exemption. These changes are slated to commence on April 1, 2024. Example: if you buy a home for $672,500, you would only pay PTT on the 172,500: $1250 in tax INSTEAD of $11,250
Enhanced Exemption for Newly Built Homes
Another significant alteration involves expanding the exemption for newly built homes intended as primary residences. Currently capped at $750,000, this exemption will increase to $1.1 million based on the fair market value of the property. Homes valued between $1.1 million and $1.15 million will witness a phase-out range of the exemption. Similar to the first change, this adjustment will come into effect on April 1, 2024. No GST (5%) UP TO 1.1 MILLION.
Introduction of a New PTT Exemption
Furthermore, the government will introduce a novel PTT exemption for purchasers of qualifying secured purpose-built rental housing buildings. To qualify, buyers must ensure that these buildings consist of at least four apartment units, are non-stratified, and are dedicated to rentals for a minimum of 10 years. This exemption will apply to transactions occurring between January 1, 2025, and December 30, 2030. This initiative aims to address the shortage of “missing middle” rental housing, offering more affordable rental options.
Anticipated Benefits and Impact
The provincial government anticipates that these changes will significantly reduce transaction costs by over $100 million. Finance Minister Katrine Conroy included the importance of supporting first-time homebuyers, especially amid soaring housing prices. Expectations suggest that individuals under 35, primarily in urban areas, will comprise the majority of beneficiaries of the increased threshold.
Conclusion
These changes signify a significant step towards improving housing affordability in British Columbia; however, analysts still project property transfer tax growth to rise by an average of 8.6% annually over the next two years. Despite this projection, the government’s adjustments reflect a proactive approach to tackling the issue of housing and offering relief to aspiring homeowners and renters.
Written by Jared Gibbons, Top South Surrey / Langley Realtor
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