BCREA is preparing for the provincial government’s annual budget consultation, which typically begins in mid-September. This year, the Association’s submission will focus on shelter taxes, particularly the importance of indexing key thresholds.
The structure of the Property Transfer Tax (PTT) is exactly the same today as it was when the tax was implemented in 1988; that is, buyers pay 1% PTT on the first $200,000 of the fair market value of a property and 2% on the balance. In 1988, the government expected the 2% portion of the PTT to apply to about 5% of homes sold. Because the thresholds weren’t indexed, the PTT now impacts significantly more homebuyers than originally intended: in 2009, the 2% portion applied to 88% of homes sold in BC.
To help prevent a similar situation with the Harmonized Sales Tax, BCREA recommends the provincial government index the provincial rebate threshold for new homes using the New Housing Price Index, and make adjustments annually.
For more information about provincial shelter taxes, including a study on tax competitiveness, a new home tax calculator and emails that can be sent directly to MLAs, visit www.bcrea.bc.ca/government-relations/shelter-taxes.