There are some significant changes in the BC Budget for 2016. If you are thinking of buying in BC this year, you’ll need to know how these changes affect your bottom-line. Yesterday’s budget includes several measures intended to increase housing supply, allow first-time buyers to enter the market, and finally measure the prevalence of foreign ownership.
INCREASED PROPERTY TRANSFER TAX ON LUXURY PROPERTIES
An increase in the property transfer tax for luxury homes with a new tier of three per cent on the portion of a purchase above $2-million. That is on top of the current rates, which impose a one per cent tax on the first $200,000 and two per cent for the portion between $200,000 and $2-million.
EXEMPTION FROM PROPERTY TRANSFER TAX ON ALL NEW CONSTRUCTION BELOW $750K
There is a new exemption for newly constructed homes, which will mean the property transfer tax won’t apply to new homes below $750,000. A partial exemption will apply for homes between $750,000 and $800,000. Those exemptions only apply for Canadian citizens and permanent residents purchasing their primary residence. The first-time home buyer program, which provides exemptions and reductions for houses below $475,000, remains in effect. Great news! On a $500k home that is a savings of $8K. That is a significant savings.
TRACKING FOREIGN OWNERSHIP
The province will track foreign ownership by requiring anyone purchasing a residential property to disclose whether they are a Canadian citizen or a permanent resident– and, if not, where they are from. The requirement also applies to directors of corporate owners.
The intent here is to make it easier for Canadian buyers to purchase moderately priced homes, while increasing the tax burden on luxury buyers. Also, the government is making a commitment to track foreign buyers so that they can manage the situation based on facts not perceptions.