BC Real Estate News: Property Transfer Tax Changes and a New Flipping Tax

As part of the 2024 budget, the British Columbia (“BC”) government recently announced several initiatives aimed at improving housing affordability in the province. Two notable announcements were changes to the province’s Property Transfer Tax (“PTT”) exemptions, as well as a flipping tax on home sales.

New PTT Exemptions

New changes introduced to the PTT will impact first-time homebuyers, purchasers of newly built principal residences, and purchasers of some purpose-built rental properties.

These changes are:

• First-time homebuyers’ exemption will be increased from $500,000 to $835,000, with the first $500,000 exempt entirely, effective April 1, 2024
• Newly built principal residence exemptions will be increased from $750,000 to $1.1 million, effective April 1, 2024
• A new exemption will be created for purchases of new secured purpose-built-rental buildings—taking effect between January 1, 2025, and December 30, 2030—meeting the following criteria:
  • All residential uses of the building must be used exclusively for rental purposes
  • Required to contain at least 4 non-stratified apartment units
  • Be used as rentals for at least 10 years

New Flipping Tax in BC (“Flipping Tax”)

Effective January 1, 2025, subject to legislative approval, a new 20% tax will be applied to income derived from the sale of BC properties that are zoned for residential use or contain a “housing unit”. The Flipping Tax is in addition to the Federal government’s 50% capital gains counterpart introduced in 2022.

Unlike the Federal tax—which targets sales made within a year of purchase—the Flipping Tax will include a declining tax percentage on sales made between the first and second year of purchase. Homes sold within a year of purchase will be subject to the full 20%, while homes sold between 1 to 2 years will be subject to the tax on a sliding scale.

The government’s official stance is that the Flipping Tax will support housing supply; however, it may negatively affect the average first-time homebuyer. For example, the buyer is looking to build equity in a condominium unit and leverage their position to afford a detached single family dwelling. With the Flipping Tax, the buyer may be forced to push their goals by a year or beyond.

While there are currently listed a number of exemptions to the Flipping Tax, the details will remain a mystery until such time as the act and corresponding regulation are published.

Note: The Flipping Tax is expected to pass during the Spring session of the legislature.

For questions about the PTT changes or new BC flipping tax, please contact Hugh H. Claxton of our Real Estate Group.