Because housing affordability directly impacts the quality of life of British Columbians, BCREA consistently and regularly recommends that the provincial government minimize the negative impact of the Property Transfer Tax (PTT). That’s why BCREA will put the following recommendations forward during the annual provincial budget consultation process, conducted by the Select Standing Committee on Finance and Government Services.
BCREA recommends the provincial government:
- index the 1% PTT threshold of $525,000 using Statistics Canada's New Housing Price Index, and make adjustments annually, and
- increase the 1% PTT threshold from $200,000 to $525,000, with 2% applying to the remainder of the fair market value.
The PTT has always been applied in the following way: 1% on the first $200,000 of the fair market value of a property, and 2% on the remainder.
Despite the dynamic nature of the housing market, the structure of the PTT has not changed since its introduction in 1987, when it was described as a “wealth tax.” At that time, the average home price was $101,916, and the 2% portion of the tax was expected to apply to only 5% of sales. In 2012, the 2% portion applied to more than 85% of homes sold in the province.
The PTT places an unfair burden on homebuyers, and is by far the highest provincial property transfer tax in the country. While BCREA understands the government’s objective to balance the budget, adjusting the PTT may well stimulate additional activity in the real estate market, encourage spending related to property transactions and would certainly demonstrate an understanding of the important role of real estate and property owners in the provincial economy.
Copyright BCREA reprinted with permission