The property transfer tax, payable by purchasers of B.C. property, was introduced 26 years ago, at a rate that made sense at the time!
That B.C.’s punishing property transfer tax has not been updated to take account of skyrocketing Lower Mainland home prices reflects an egregious lack of accountability on the part of Christy Clark’s government.
The tax, payable by purchasers of B.C. property, was introduced 26 years ago, at a rate that made sense at the time. Purchasers pay one per cent on the first $200,000 of a property’s selling price, two per cent on the balance.
The tax, at its inception, was not seen as particularly onerous because homes, by today’s standards, were far more modestly priced. But fast forward to 2013, when the typical price of a detached home in Vancouver has soared by 500 per cent — to $1 million or more — and what you have is a daunting situation confronting most prospective homeowners.
It is difficult enough affording a home in Vancouver. But imagine being required to add to the real estate bill a transfer tax of $20,000 (for a $1-million property) or $40,000 (for a $2-million property). And, keep in mind, this is a gift to the province, with no particular service rendered in return for the cash. Some might even call the PTT a tax grab.
While B.C. annually collected a few hundred million dollars from the transfer tax back in the ’80s and ’90s, more recently the province has been pulling in sums close to a billion dollars. “None of that is put back into affordable housing, which I think is a disgrace,” Sannich Coun. Paul Gerrard said last month at the Union of B.C. Municipalities conference. Indeed, the PPT makes already unaffordable housing more expensive than it needs to be.
The Real Estate Board of Greater Vancouver is calling for change, correctly pointing out the tax is structured to reflect 1980s-style home prices rather than current ones.
The board is urging that the two per cent part of the levy apply only when a Greater Vancouver property is sold for more than $600,000. It also argues any threshold should be adjusted upward annually as home prices increase.
B.C.’s finance minister Mike de Jong has said he wants to look closely at thresholds for the tax. But he has been dragging his feet on addressing this problem, recently telling The Vancouver Sun he would consider “any possible changes” during deliberations for his 2014 budget. That is not good enough. A generation of British Columbians has been fleeced by this tax. Many Lower Mainlanders are having a difficult time coping with sky-high real estate prices and need help now. They need a clear statement from government that relief is coming — and soon.
Moreover, an argument can be made that any measure to make real estate more affordable in this region would encourage people to buy — an activity that generates big money for businesses dealing in finance, insurance, furniture, appraisals and renovations, to name a few.
The increase in economic activity would help offset any drop in transfer tax revenue collected by the province.
The Lower Mainland has some of the highest land values in Canada. It also has — with the exception of Toronto — the highest property transfer taxes in Canada.
All of which contributes to the Clark government inexplicably making it harder, rather than easier, to afford a roof over one’s head.