British Columbia Government Announces 3 Major Changes to Property Transfer Tax (PTT) to Boost Housing Affordability

In a bid to tackle the pressing issue of housing affordability, the Government of British Columbia has unveiled three significant changes to its Property Transfer Tax (PTT) framework as part of the 2024 provincial budget.

First Time Home Buyers PTT Exemption

The first change involves a substantial increase in the threshold for first-time homebuyers’ exemption, from a fair market value of $500,000 to $835,000. Under this adjustment, the first $500,000 of the property’s value will be exempt from taxation, with a phase-out range for the complete elimination of the exemption at $860,000. Properties valued under $500,000 will be completely exempt from the tax. These changes are set to take effect from April 1, 2024.

New Build Home PTT Exemption

The second change pertains to the newly built home exemption, which will see an expansion from $750,000 to $1.1 million on the fair market value. Properties with a FMV of under $1.1M will not pay Property Transfer Tax. Properties within the fair market value range of $1.1 million to $1.15 million will experience a phase-out range of the exemption. This amendment will also come into play on April 1, 2024.

Purpose Built Rental PTT Exemption

The third and final change introduces a brand-new PTT exemption for the purchase of new qualifying secured purpose-built rental housing buildings. These buildings are required to contain a minimum of four apartment units, be non-stratified, and be utilized as rentals for at least 10 years, with the residential uses of the building entirely dedicated to rental purposes. This specific PTT exemption will be applicable to transactions involving such buildings between January 1, 2025, and December 30, 2030. This policy aims to stimulate the development of “missing middle” rental housing, especially in the face of soaring home prices that have put homeownership out of reach for many.

The provincial government estimates that these exemptions will result in reducing transaction costs by over $100 million per year.

During the budget speech, BC Minister of Finance Katrine Conroy highlighted the challenges of saving for a down payment in the current housing market, emphasizing the increasing pressure on the market and the trend of people renting for longer.

Given that the majority of first-time homebuyers are under the age of 35, these changes are particularly significant for the younger demographic striving to enter the housing market.

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. These changes signal a positive step forward in addressing the critical issue of housing affordability and aim to provide a much-needed financial boost to prospective homebuyers in British Columbia.