Property Transfer Tax Exemption Increased from $500,000 to $835,000 but…..you will pay 2% tax on the portion of purchase price above $500,000 – as long as it is below $835,000.
For First-Time Home Buyers: The First-Time Homebuyers’ Program, which provides qualified homebuyers an exemption on Property Transfer Tax now extends to homes with a purchase price of up to $835,000. Here’s how it breaks down depending on the fair market value of the home:
- Less Than $500,000 = No Property Transfer tax, saving up to $8,000.
- Between $500,000 and $835,000 = No Property Transfer Tax on first $500,000; but 2% tax payable on the amount above $500,000. Eg. If purchase price is $700,000 then you would pay $4000 purchase tax ( previously you would have paid $12,000 as the price is above the arbitrary ceiling of $500,000.) So you save $8000 in tax.
- Between $835,000 and $860,000 = Partial Exemption applies. Details have yet to be decided.
Newly Built Homes: You do not need to be a first-time buyer to receive this exemption.
Properties valued at less than $1.1 million will also benefit from a property transfer tax exemption starting April 1, 2024. This has increased from the previous ceiling of $750,000.
A partial exemption is also available for properties with a Fair Market Value (FMV) just above the threshold. The phase out range is $50,000 above the threshold, so properties with a FMV of greater than $1,150,000 will not be able to claim the Newly Built Home Exemption.
Rental Property Construction: Purpose-built rental buildings of four or more units will receive a property transfer tax exemption. This exemption will apply to transactions between January 1, 2025, and December 30, 2030. The 2023 budget limited the tax payable on values over $3,000,000. Budget 2024 builds on this exemption and provides an exemption from the PTT on purchases of new qualifying purpose-built rental buildings.
Proposed Property ‘Flipping’ Tax
To discourage short-term property flipping, a Property Flipping Tax is being proposed:
- The tax would apply to income from BC properties sold after less than 2 years of ownership on or after January 1, 2025.
- The tax rate ranges from 20% for properties sold within a year of purchase and is pro-rated on sales up to within two years. Specifically, properties sold within 1 year are taxed at 20%, and will decline to zero between 366 and 730 days.
- Exemptions are available for scenarios such as separation or divorce, death, relocation, or insolvency, as well as those who add to the housing supply or engage in construction and real estate development.
Secondary Suite Incentive
For homeowners considering adding a secondary suite to be rented out below market value for at least 5 years, eligible homeowners can receive up to 50% of renovation costs, capped at $40,000, in the form of a forgivable loan.
- Homeowners must live on the property and meet other criteria, including income thresholds and property values.
- The secondary suite must be a new legal self-contained unit. Laneway homes and garden suites are eligible.
- Qualifying building permits must be received on or after April 1, 2023.
- Applications are open on April 17, 2024, and are approved on a first-come, first-served basis until funding is exhausted.
For more information and to determine your eligibility, please visit bchousing.org/secondary-suite.