A central part of the British Columbia government’s 2024 budget included new measures aimed at tackling housing affordability challenges.
The measures announced on Thursday include the introduction of a new house-flipping tax, enhanced property tax exemptions and new funds to encourage the construction of new homes.
“People want a decent home they can afford in a community they love,” the provincial government said in its budget release. “With inflation and day-to-day cost-of-living pressures, finding affordable housing is challenging for too many people.”
BC Home Flipping Tax
At the forefront of the budget's housing strategy is the introduction of the BC Home Flipping Tax, set to take effect on January 1, 2025.
This tax directly targets speculative real estate transactions, which have been blamed for helping to drive up housing prices across the province.
The tax will be applied to the profit of any residential property sold within two years of its purchase. The government has included a list of specific exemptions for life circumstances, including divorce, death, illness and relocation for work.
Revenue from the tax will be specifically earmarked for building affordable housing throughout the province, the government said.
Enhancing homeownership accessibility
Understanding that the path to homeownership is fraught with financial hurdles, the 2024 budget also introduces property transfer tax exemptions. These enhancements are two-fold and focus on broadening the reach of homeownership:
Expanding the First Time Homebuyers’ Program: The government has increased the threshold for this program “so it reflects today’s market,” it said.
First-time buyers of homes valued up to $835,000 will enjoy a property transfer tax exemption on the first $500,000 of the market value, with potential savings reaching $8,000. Additionally, buyers that have homes valued at up to $860,000 will receive a partial exemption, the details of which are yet to be confirmed by the BC Government. The government estimates this will benefit approximately 14,500 people, or about twice as many under previous exemptions.
Lower costs for newly built homes: In a bid to encourage the purchase of new constructions, buyers of homes valued up to $1.1 million will benefit from the newly-built home exemption.
Additionally, in an effort to lower the cost and encourage the construction of more rental units, eligible purpose-built rental buildings of four or more units will also receive a property transfer tax exemption until 2030.
Funding for BC Builds
Finally, the government also announced $198 million in new funding for the BC Builds program, which it says will “speed up the development of new housing that fits the budgets of middle-income people and families.”
The program, delivered through BC Housing, was announced earlier this month, leverages government, community and non-profit owned and under-used land to speed up the delivery of housing and help bring costs more in line with what middle-income households earn.
Earlier this week, the federal government announced $2 billion in financing towards the program, which is in addition to the $950 million investment from the province. The government estimates that between 8,000 and 10,000 homes will be built over the next five years for people with middle-class incomes.