On February 22, the Provincial Government introduced Budget 2024, which made several significant tax changes focused on housing. Beginning April 1, 2024, changes will apply to the province’s Property Transfer Tax (the “PTT”) exemptions to benefit both first-time homebuyers and investors.
First-Time Homebuyers’ Exemption
Whenever property is transferred in British Columbia, it is subject to PTT unless the transfer qualifies for one of the exemptions offered by the province. Before the changes introduced by Budget 2024, qualifying first-time homebuyers could claim an exemption for homes with a fair market value of $500,000 or less. The changes implemented will increase that amount to $835,000, meaning qualifying purchasers will see an elimination of PTT on the first $500,000 of the purchase price of their first home. A partial exemption on homes with a fair market value of between $835,000 and $860,000 will be available for qualifying purchasers.
This change is welcome, as the average home price in BC prevented many from taking advantage of the exemption—the average home price in the Okanagan in December 2023 was $774,752 and $965,447 for BC overall. Budget 2024 implements a first-time homebuyer exemption that better reflects the economic realities faced by first-time homebuyers.
Newly Built Home Exemption
Another welcome change in Budget 2024 relates to the PTT exemption for newly built homes used as primary residences. Qualifying purchasers of newly constructed homes will be exempt from PTT on home purchases with a fair market value of $1.1 million or less, with a partial exemption being available for newly built homes with a fair market value between $1.1 million and $1.15 million.
Purpose-Built Rental Exemption
The final change announced in the PTT exemption regime relates to purpose-built rental buildings. Budget 2024 fully exempts certain secured purpose-built rental housing buildings from PTT. These buildings must consist of at least four apartment units, the buildings cannot be stratified, and the residential portions of the building must be dedicated for rentals for a minimum of ten years. The exemption from PTT will apply to transactions occurring between January 25, 2025, and December 30, 2030. However, the additional PTT that applies to foreign entities in select regions of British Columbia will continue to apply to these buildings.
Takeaways
The changes announced to the PTT exemptions offer expanded opportunities for prospective purchasers and sellers in British Columbia. However, the PTT changes are just one aspect of the tax changes that will be implemented by Budget 2024. Other notable housing tax changes include changes to the Speculation and Vacancy Tax related to registered leases and the introduction of a new tax targeting home-flipping activity—a Pushor Mitchell Legal Alert on that topic can be found here.
Specific tax exemption requirements can be challenging to navigate; if you have questions relating to PTT, Speculation and Vacancy Tax, or any other form of tax, Pushor Mitchell has an experienced tax advisor ready to assist you.
