New and expanded tax measures, as well as investing in the new BC Builds program are among the province's top housing priorities, according to the NDP government budget unveiled on Thursday.
Budget 2024 features a new tax on flipping homes, expansions on existing tax measures and funding for the recently announced BC Builds program.
All the measures introduced in Budget 2024 are part of the Homes for People plan, which was a key piece of last year’s spending.
B.C. last year dedicated $4.2 billion in funding – the largest three-year housing investment in provincial history – to support affordable housing, build rental supply and tackle homelessness.
Targeting affordability through tax measures
The new BC Home Flipping Tax, which is similar to the Speculation and Vacancy Tax, is aimed at discouraging investors from driving up prices. This will be a tax on the profit made from selling a residential property within two years of buying it. It goes into effect Jan. 1, 2025.
The tax rate will be 20 per cent for properties sold within 365 days of purchase before it begins declining all the way to zero by the 730th day, according to budget documents.
There are exemptions for extenuating circumstances that might motivate a property sale within two years. This includes divorce, death, disability, illness and life changes such as loss of a job, among others.
Revenue gathered from this will go towards building more homes across the province.
“The housing crisis is complex. It’s been made worse by decades of inaction – where governments of all levels left it to the private market to deliver homes. Prices went up as governments stepped back and speculators moved in,” said Finance Minister Katrine Conroy in her budget speech.
“That’s why we’re bringing in a home-flipping tax as our latest measure to crack down on bad actors.”
In addition to this new tax measure, B.C. is expanding on the Property Transfer Tax Act. Part of this is increasing the threshold for the First Time Homebuyers program from $500,000 to $835,00, with the first $500,000 completely exempt from the property transfer tax. This will be effective on April 1, 2024.
“An estimated 14,500 people – twice as many as before – will now be eligible for support to buy their first home, helping them move out of the rental market and freeing up rental for others,” said the ministry of finance.
First-time homebuyers are getting further support through a threshold increase for the newly built home exemption of the property transfer tax. Also effective on April 1, 2024, the threshold has been increased from $750,000 to 1.1 million.
Conroy said in her speech that the program was initially designed to provide British Columbians with a “financial boost,” but that it no longer reflects the realities of today’s housing market.
Lastly, eligible purpose-built rental buildings that have four or more units will also receive a property transfer tax exemption between Jan. 1, 2025, and Dec. 31, 2030.
“Raising these property transfer tax exemption thresholds and incentivizing building of new rentals and homes will save more people more money – an estimated $100 million per year,” said the Ministry of Finance.
This week's B.C. throne speech said that the province’s housing agenda would introduce measures to protect renters from "bad-faith evictions." This was not included in the latest budget.
However, as British Columbians file their 2023 income taxes, renters will see up to $400 returned to them through the B.C. renter’s tax credit.
Building urgently needed housing
While one part of the budget relies on tax measures to support those hoping to buy into B.C.’s housing market, the other part is supporting efforts to increase supply.
Included in Budget 2024 is $198 million in new funding for the multibillion-dollar program, including $150 million in operating funding and $48 million in capital funding.
The program aims to provide low-cost financing to build rental property developments on land owned by governments, First Nations and non-profits, and is geared towards creating housing for what the province describes as middle-income earners.
Prime Minister Justin Trudeau was in Vancouver on Tuesday to announce that Ottawa is adding $2 billion in financing to BC Builds, on top of the commitments made in the budget.
To further support the effort of increasing housing supply across B.C., $116 million in funding over the next three years will be dedicated to existing programs and services such as digital permitting, short-term rental regulations and accelerating funding to local governments for developmental approval frameworks.
“Funding will also maintain 500 permanent and temporary shelter spaces in communities throughout B.C.,” said the Ministry of Finance.
The province claims that more than 78,000 homes have been delivered or are underway, working towards the 110,000 units that the NDP pledged to build in 2017.
