While first-time homebuyers are eligible for tax breaks, new housing policies announced in B.C.'s 2024 budget target speculators.
The tax program comes in conjunction with new funding allocated to the province's BC Build program, which is aimed at stimulating the construction of new rental housing.
The initiative comes as the NDP government claims that 78,000 homes have been “delivered or are in progress” against a 2017 election pledge to build 114,000 homes.
Home resale tax announced
Starting in 2025, the state will introduce a new “home resale tax” that will target profits made from selling a residential property within two years.
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Sellers are taxed 20% on profits if they sell the property within the first year of purchase, but the tax rate drops to zero in the second year. This also applies to transfer agreements.
The exemptions apply to “certain life circumstances,” such as separation, death, divorce, disability, etc. The state also promises exemptions for sellers who “increase the housing supply or are engaged in construction or real estate development.”
2:05 10 things to know about the 2024 BC Budget
But the Treasury Department said the content of the exemptions and how they would be assessed and enforced have not yet been fully fleshed out.
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The tax is expected to generate $43 million in revenue in 2025, its first year of full implementation.
The home resale tax was one of British Columbia Premier David Eby's pledges during his 2022 leadership campaign.
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7:57 BC Budget 2024: An analysis of provincial priorities for next year
Real estate transfer tax exemption
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While the state is targeting new taxes on would-be speculators, it has also announced tax cuts for first-time home buyers and rental housing developers.
The real estate transfer tax exemption threshold for first-time home buyers will increase from $500,000 properties to $835,000 starting April 1, 2024. Properties with a fair market value of less than $500,000 will be completely exempt from the tax.
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The proposed budget would double the number of buyers eligible for the exemption to about 14,500 per year, estimated to save them up to $8,000 on their purchase.
Newly constructed homes priced at less than $1.1 million will also be exempt from real estate transfer taxes starting April 1, with the tax reduction threshold increasing from $750,000.
To encourage new construction of rental buildings, the state is also introducing a basic real estate transfer tax exemption for the purchase of qualified new rental buildings, which will apply from 2025 to 2030.
The exemption applies to non-strata buildings held as rentals for at least 10 years and containing at least four apartments.
Along with the tax measures, the province has also provided greater clarity on the rollout of the BC Builds program.
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The 2024 budget allocates $198 million over the next three years for the initiative, which will use federal land and state funds to boost the construction of rental housing.
Of that funding, $50 million will be spent on operating funds and $14 million on capital funds in 2024.
The program aims to shorten project construction times from years to 12 to 18 months. All units will be means-tested, and a fifth of the apartments will be offered at 20 percent below market rate.
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