Real Estate changes in 2024

BC Government Announces Real Estate Changes in 2024 Budget

The BC NDP Government has hit the ground running in 2024. Just last week, they unveiled the provincial budget, introducing several notable Real Estate Changes in 2024 housing market.

In the 2024 provincial budget, the BC Government is implementing three significant changes to the PTT Framework.

Increase the Fair Market Value Threshold for the First Time Home Buyer (FTHB) Exemption

Starting April 1st, 2024, significant changes are coming to the First Time Home Buyer (FTHB) exemption in British Columbia. Currently, the exemption applies to properties with a fair market value (FMV) of less than $500,000, with a partial exemption for properties valued between $500,000 and $525,000.

Under the new regulations, the First Time Home Buyer exemption will be structured differently. For properties with an Fair Market Value of less than $835,000, the exemption will cover the first $500,000, with Property Transfer Tax (PTT) payable only on the difference between the Fair Market Value and $500,000. For instance, if a property is valued at $700,000, the PTT paid would be 2% of $200,000 ($700,000 minus $500,000). This change saves the purchaser a total of $8,000 in PTT.

However, if the Fair Market Value of the property exceeds $835,000, there will be no PTT exemption available. These adjustments aim to better align the First Time Home Buyer exemption with current market conditions and provide relief for first-time home buyers while ensuring fairness in the taxation system.

Increase the Fair Market Value threshold for the Newly Built Home Exemption

Starting April 1, 2024, significant changes are occurring to the threshold for claiming the Newly Built Home Exemption in British Columbia. The fair market value threshold for this exemption will be raised from $750,000 to $1,100,000. Additionally, a partial exemption will be available for properties valued just above this threshold. The phase-out range extends to $50,000 above the threshold, meaning properties with an fair market value exceeding $1,150,000 will not qualify for the Newly Built Home Exemption.

These adjustments aim to accommodate the evolving real estate market and provide relief for home buyers purchasing newly constructed properties.

Purpose-Built Rental Exemption

In the 2023 Budget, a limited exemption was introduced for purpose-built rental buildings, aiming to reduce the tax payable on properties valued over $3,000,000. Building upon this initiative, the 2024 Budget extends the exemption by providing a full exemption from the Property Transfer Tax (PTT) for purchases of new qualifying purpose-built rental buildings.

This move aims to incentivize the development of purpose-built rental properties and address housing affordability challenges by encouraging investment in the rental market.

BC Home Flipping Tax

Starting January 1, 2025, the proposed BC Home Flipping Tax will be applicable to any residential property sold within two years of its purchase. The tax rate will vary based on the duration of ownership. Sellers who sell within the first 365 days will face a 20% tax rate on the income earned from the sale, gradually decreasing until it reaches zero percent at the 730-day mark.

Additionally, exemptions will be granted for various circumstances, including separation or divorce, death, disability or illness, relocation for work, involuntary job loss, change in household membership, personal safety concerns, and insolvency. Further exemptions may be announced at a later date. These exemptions aim to provide relief for individuals facing unforeseen circumstances or life changes, ensuring fairness in the implementation of the home flipping tax.

The tax will apply to both properties and assignments of contracts and is in addition to any existing federal or provincial income taxes incurred from the sale of the property, including the Federal anti-flipping tax.

Check our other blogs under Real Estate 101 – that might give you answers about buying or selling a home.

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