Government Needs Transitional Rules for All Transactions Impacted By Taxes Introduced in Budget 2018 — New Taxes Unlikely to Stabilize Housing Market
CATEGORY: News Releases
TAGS: Foreign Buyer’s Tax Property Transfer Tax Provincial Budget Speculation and Vacancy Tax Taxation
Victoria, BC - February 20, 2018. The British Columbia Real Estate Association (BCREA) calls on the government to introduce transitional rules for all transactions impacted by the new tax measures introduced in Budget 2018. The new tax measures come into effect on February 21, 2018. The Property Transfer Tax (PTT) increase to 5 per cent for properties over $3 million, as well as the increase to 20 per cent and expansion of the Foreign Buyer's Tax to other parts of the province will have an immediate impact on transactions underway.
When the Foreign Buyer's Tax was introduced in 2016, consumers and REALTORS® were frustrated by the number of collapsed deals due to how the tax was introduced. At the time, the Association called for grandfathering of transactions underway to ensure a smooth transition. While the province has indicated transitional rules for the expansion of the Foreign Buyer's Tax to other parts of BC, the Association believes this should apply to all transactions.
Of additional concern, the "speculation" tax introduced in the budget will affect British Columbians who own or want to invest in those markets by buying a second home or recreational property.
The Association welcomes measures in Budget 2018 to increase the supply of affordable housing in British Columbia. These initiatives are important steps in supporting those who need the most assistance to find and afford housing. However, the government missed the opportunity to help home buyers across the province by increasing the thresholds to the PTT or index those thresholds to reflect the changing real estate market.
The new tax measures introduced by the government to "stabilize the housing market" are unlikely to achieve the intended objective. The taxes ignore the major culprit - matching housing supply and demand within a reasonable timeframe. Additional taxes, whether targeted at foreign buyers or speculators, do not reduce the gap between when a housing project starts, and when it is available to purchase.
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