As part of this year’s provincial budget announced on February 22nd, the British Columbia government introduced three changes to the property transfer tax rules to improve housing supply and affordability.
First Time Home Buyers’ Exemption Threshold Increased from $500,000 to $835,000
The increased threshold means that properties with a fair market value up to $500,000 are fully exempt from property transfer tax, with a gradual phase-out of the exemption for properties valued between $835,000 to $860,000. According to the government, this change aims to aid first-time home buyers, particularly those under 35 and residing in urban areas, by reducing the financial burden of purchasing a home.
It is important to note that the absolute property transfer tax savings remain the same. That is, under the old rules, a first-time home buyer would have saved a maximum of $8,000 (property transfer tax on $500,000) if the property’s value at the time of purchase was $500,000 but fully lost the entire property transfer tax exemption if the property value was greater than $525,000. Now, that same first-time home buyer would save a maximum of $8,000 if the property’s value at the time of purchase is no more than $835,000 and fully lose the entire property transfer tax exemption if the property’s value exceeds $860,000.
The Newly Built Home Exemption Threshold Increased from $750,000 to $1,100,000
Properties under this new threshold will be exempt from property transfer tax, benefiting buyers of new homes, especially in urban regions. The exemption is phased out for homes between $1,100,000 and $1,150,000. According to the government, the increase in threshold is designed to support individuals and families in acquiring new principal residences.
Like the First Time Home Buyer’s Exemption changes, the new rules only increase the threshold and do not increase the property transfer tax savings. So, for example, under the old rules, a home buyer would have saved a maximum of $13,000 (property transfer tax on $750,000) if the property’s value was $750,000 at the time of purchase but fully lose the entire $13,000 property transfer tax exemption if the property value was greater than $800,000. Now, that same home buyer would save a maximum of $13,000 if the property’s value at the time of purchase is no more than $1,100,000 and fully lose the entire property transfer tax exemption if the property’s value exceeds $1,150,000.
New Purpose-built Rental Buildings Exemption
An exemption has been introduced for new qualifying purpose-built rent buildings, effective from January 1, 2025, to December 31, 2030. This exemption applies to non-stratified buildings dedicated to long-term rentals for at least ten years, with a minimum of four apartments. According to the government, it aims to stimulate the development of new rental properties, enhance housing affordability and supply, and build upon previous incentives introduced in the 2023 and 2018 budgets to support rental housing construction and revitalization.
The increase in the exemption thresholds should be welcome news for qualifying first-time home buyers or buyers purchasing a newly built home, as more will qualify for either of these exemptions.
I recommend that you contact a tax or legal professional for more information about the impact of the BC Property Transfer Tax Rules and these changes on your circumstances.