In 2024, the province of British Columbia is set to introduce significant changes to the property transfer tax that will have a notable impact on first-time home buyers. One of the key changes is the revision of the Property Transfer Tax (PTT) threshold. Currently, first-time home buyers are eligible for a full exemption on properties valued up to $500,000.
First-Time Home Buyers:
However, starting April 1st, 2024, this threshold is set to increase to $835,000 for first time buyers. Under $500,000 is still fully exempt and then the amounts between $500,000 and $835,000 will have a 2% tax. And then the amounts between $835,000-$860,000 set as a decreasing exemption amount and above $860,000 there is no exemption at all. This adjustment aims to make homeownership more accessible to first-time buyers in BC, especially in a market where housing affordability has been a growing concern.
For example, a property valued at $700,000 before April 1st would have a property transfer tax of 1% of the first 200,000 and 2% of the next $600,000 for a total land transfer tax of $10,000. After April 1st, 2024 the property will only have a 2% tax on the amounts between $500k & $835k – in this scenario that would mean a tax of $4,000 – saving a FTHB $6000
Moreover, the revised PTT exemption for first-time home buyers will now also apply to newly built properties, providing additional support for those looking to purchase a new home. This change is expected to encourage more individuals and families to consider newly constructed homes, thereby stimulating the construction industry and boosting the supply of new housing in the province.
Newly Built Properties:
In addition to the changes benefiting first-time home buyers, the property transfer tax adjustments in 2024 will also have implications for newly built properties in British Columbia. Under the new regulations, newly constructed homes will be subject to a different PTT rate compared to existing properties. This change is aimed at promoting the development of new housing units and incentivizing builders to invest in the construction of residential properties.
Effective April 1, 2024, the fair market value threshold for a full exemption for newly built homes is increased from $750,000 to $1,100,000. This means that there is NO TRANSFER TAX paid on new builds valued up to $1.1M. You will still have GST, but the absence of PTT to the new threshold has a savings of up to $20,000. (The PTT savings on a $750,000 property was $15,000)
Furthermore, the revised PTT structure for newly built properties will include provisions to support energy-efficient and sustainable housing initiatives. Developers who incorporate green building practices and environmentally friendly features into their projects may be eligible for tax incentives or rebates, aligning with the province’s goals of promoting sustainable development and reducing carbon emissions.
Overall, the upcoming changes to the property transfer tax in British Columbia in 2024 reflect the government’s commitment to enhancing housing affordability, supporting first-time home buyers, and encouraging the construction of new, energy-efficient properties in the province. These adjustments are expected to have a positive impact on the real estate market and contribute to the continued growth and vitality of BC’s housing sector.