The BC NDP Government has been active to start 2024. Last week, the provincial budget was tabled, and a couple of big changes are coming to the Real Estate market.
Updates to the Property Transfer Tax (PTT) Framework
The 2024 provincial budget the BC Government is making three significantchanges to the PTT Framework
1. Increase the Fair Market Value Threshold for the First Time Home Buyer (FTHB) Exemption:
Currently, the FTHB full exemption applies to properties with a fair marketvalue (FMV) of less than $500,000, with a partial exemption for properties witha FMV of $500,000 to $525,000.
As of April 1st, 2024, the First Time Home Buyer (FTHB) exemption will apply to properties in a different way. For properties with a Fair Market Value (FMV) of less than $835,000, Property Transfer Tax (PTT) is not payable on the first $500,000, but payable on the difference between the Fair Market Value and $500,000. For example, if the FMV of the property is $700,000, PTT paid wouldbe 2% of $200,000 ($700,000 less $500,000). Not paying PTT on the first $500,000 saves the purchaser a total of $8,000. If the property has a FMV between $835,000 and $860,000, then a partialexemption applies, the details of which are not yet confirmed by the BC government. If the FMV of the property is over $860,000, then there is no FTHB PTT exemption.
2. Increase the Fair Market Value (FMV) Threshold for the Newly Built Home Exemption
Effective April 1, 2024, the FMV threshold to claim the Newly Built Home Exemption will be increased from $750,000 to $1,100,000. A partial exemption is also available for properties with a 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.
3. New “Flipping Tax”
A new tax targeting home flipping activity and short-term speculation will officially begin on January 1, 2025. This tax will apply on the sale of residential property held by an owner for less than two years, with the seller being taxed up to 20% of the income from the sales. To specify, properties sold within 1 year are taxed at 20%, and will decline to zero between 366 and 730 days. Exemptions may apply in certain circumstances.
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