First-time homebuyers will get a tax break, while speculators are being targeted in new housing initiatives unveiled in B.C.’s 2024 budget.
The tax programs come along with new money earmarked for the province’s BC Builds program intended to spur the construction of new rental housing.
The initiatives come with the NDP government claiming 78,000 homes have been “delivered or (are) underway” towards its 2017 election pledge to build 114,000 homes.
House-flipping tax unveiled
Starting in 2025, the province will implement a new “home-flipping tax” to target the profit made from selling a residential property within two years.
Sellers will see a 20 per cent tax on profit if they sell the property within the first year of purchase, with the rate declining to zero over the course of the second year. It will also apply to assignment contracts.
Exemptions will apply “for certain life circumstances” including separation, death, divorce and disability. The province has also pledged exemptions for sellers who “add to the housing supply or engage in construction and real estate development.”
Exemptions, and how they will be assessed and enforced, however, have not been fully fleshed out, according to the Ministry of Finance.
The tax is expected to bring in $43 million in 2025 during the first year it is fully in force.
A house flipping tax was one of B.C. Premier David Eby’s promises during his 2022 leadership campaign.
Property transfer tax exemptions
While the province is aiming a new tax at would-be speculators, it’s also unveiling a tax break for first-time homebuyers and rental housing developers.
As of April 1, 2024, the threshold for the exemption to the property transfer tax for first-time homebuyers is being lifted from properties costing half a million dollars to $835,000. Properties with a fair market value of under $500,000 will be completely tax-exempt.
The budget estimates the number of buyers eligible for exemptions will double, to about 14,500 people per year, with maximum savings of $8,000 on a purchase.
Newly built homes valued under $1.1 million will also see a property transfer tax exemption as of April 1, raising the threshold for the tax break from $750,000.
The province is also rolling out a basic property transfer tax exemption for purchases of new, qualifying purpose built rental buildings, aimed at encouraging new rental construction. The exemption will apply between 2025 and 2030.
The exemption covers non-stratified buildings held as rentals for at least 10 years, and including at least four apartments.
Along with the tax measures, the province is providing more clarity on the rollout of its BC Builds program.
The 2024 budget earmarks $198 million over the next three years for the initiative, which uses government-owned land and provincial financing to encourage rental construction.
Of that money, $50 million in operating funding and $14 million in capital funding is committed for 2024.
The program aims to cut project build times from years down to 12-18 months. All units will be means tested, and one-fifth of apartments will be held at 20 per cent below market rates.