BC Budget 2016 – the impact on You
The BC government introduced its 2016 budget today.
The budget included a number of items intended to affect affordability and availability in the Lower Mainland’s housing market.
Here’s a summary:
Property Transfer Tax (PTT)
• a New Housing exemption will apply to newly built homes or newly subdivided units priced up to $750,000, saving buyers up to $13,000; and
• a partial exemption will apply on newly built homes priced $750,000 to $800,000.
• a new 3% PTT rate will apply to the portion of a home sale that exceeds $2 million. For homes that sell for below $2 million, the PTT will continue to apply at a rate of 1% on the first $200,000 and 2% on the balance.
These changes will take effect on February 17, 2016.
While I am happy that the government is addressing concerns over the Property Transfer Tax, the cost of land in Vancouver proper exceeds their exemption rates for newly built homes. This does not address affordability in Vancouver, only some suburbs of the Lower Mainland.
Starting this summer, individuals and corporations buying property must disclose if they are Canadian citizens or permanent residents of Canada and if neither, their home country. These changes will provide information on the volume of foreign investment in BC.
This is a step in the right direction, but there have been similar types of data collection to this in the past. Perhaps this will help create better statistics over who is purchasing property.
Home Owner Grant
The Home Owner Grant threshold will increase to $1.2 million from $1.1 million for the 2016 tax year.
The province will invest $355 million to help the BC Housing Management Commission support more than 2,000 affordable housing units for residents with low-to-moderate incomes.
Last month there were over 57,000 homes listed on the MLS system in Metro Vancouver. This is an incredibly hot market, where many homes are selling for over asking price within a week of being on the market. Let's assume that the average price of all of those homes is $1,000,000 (we are taking into consideration condos, townhomes, and detached houses). Now, let's assume 50% of those homes sell. 1,000,000 * 57,000 = 57,000,000,000/50% = 28,500,000,000 would be an estimated total revenue. The government gets their Property Transfer Tax cut. It is tricky to correctly estimate what the PTT would be, considering the price varies among the properties. Let's just take 1.5% of the total, which would be $427,500,000.
While I appreciate that the government is talking and making a few changes, I feel based on the revenue they are bringing in, they should be investing more in our province.