In an effort to tackle BC’s housing affordability crisis, the British Columbia Real Estate Association (BCREA) says it wants to save first-time homebuyers more money by increasing the property transfer tax exemption threshold by $250,000.
Adjusting the province’s property transfer tax is one of five recommendations the BCREA outlined in its Housing Affordability Plan, published today.
The plan comes less than a month before the provincial election and urges different levels of government to collaborate to provide affordable and suitable housing for British Columbians.
The property transfer tax exemption threshold for BC’s First-Time Homebuyers Program was amended in February, increasing from $475,000 to $500,000 but the BCREA suggests raising the threshold even higher to $750,000.
“We have for 30 years almost been recommending either the elimination of this or that it just not be such a burden to British Columbians,” Norma Miller, Acting Director of Communications and Public Affairs for BCREA tells BuzzBuzzNews.
In addition, the BCREA recommends increasing the current threshold on 2 per cent property transfer taxes charged on the portion of home purchases between $200,000 and $2 million to start at $500,000 instead.
To generate favourable property transfer taxes, Miller adds the thresholds should reflect BC’s changing economy.
“We also firmly believe that all of the thresholds related to the property transfer tax should be indexed using the Consumer Home Price Index and that the adjustments are made automatically every year,” she says.
As of the fourth quarter of 2016, Vancouver is the most expensive housing market in Canada. To help people enter and afford the market in the province, the BCREA says the federal government needs to adjust the Home Buyers’ Plan.
“We’re suggesting that our provincial government could ask the federal government to modernize the Home Buyers’ Plan, the program that allows the use of RRSP’s to buy homes, so that people who have to move for say work reasons or some sort of family reason can be eligible for the program as well,” says Miller.
The BCREA also recommends keeping pace with inflation by tying the withdrawal limit of the plan to the Consumer Price Index.
Despite recent initiatives by the provincial government to create more affordable rental units, more work can be done to increase supply, says the BCREA.
With the help of the federal government, the BCREA suggests amending the Income Tax Act to defer taxes for all real property investments where the proceeds from the transaction are invested in another real property.
“What we believe is the case is that the current tax structure does not encourage investment in rental properties and so if simple changes are made that allow people to re-invest without penalty, that we will see more rental housing built,” suggests Miller.
To prepare for population growth in the province, which BC Statistics expects will increase 25 per cent to over six million by 2041, the plan also outlines recommendations to densify urban spaces.
Using property transfer taxes, the BCREA suggests creating smaller, market-priced homes in low density neighbourhoods and affordable family (three-bedroom) homes along transit corridors in low density communities.
Along with encouraging urban density, the BCREA’s final suggestion is to promote local governments’ best practices to address the housing affordability crisis.
The association recommends municipalities use revenue from property transfer taxes to create affordable housing in low density neighbourhoods. It also suggests municipalities improve the development application process by shortening turnaround times when issuing construction permits.