Well it’s a rare occasion when a government actually gives back or agrees to take less of your money, but in BC that’s exactly what happened with the new property transfer tax exemption up to $750,000. In case you didn’t’ hear, going forward from today, if you’re purchasing a new home up to $750,000, you will be exempted from paying the property transfer tax (a savings of $13,000 on a $750,000 purchase), provided the home is new and you are either a Canadian citizen or permanent resident of Canada.
One thing that struck me as an interesting coincidence this morning, was that this new change will basically negate the impact of the new down payment rule changes that came into law just a few days ago, for new homes up to $750,000. The new down payment rule was the one that required you to put down 10% of every dollar for purchase prices over $500,000. So with the new down payment rules, if you were purchasing a new home for $750,000, you were now required to put down an additional $12,500 more than a week ago. However, with the new provincial change you now pay $13,000 less in transfer tax for the same home, so the net effect of all of this is that the new down payment rules won’t have any impact on your cash required to close. So the provincial government has in essence cancelled the impact of what the feds did, so long as you purchase a new home up to $750,000.
The other change that has now taken effect as well is that for homes that have a purchase price of $2,000,000 or better, the property transfer tax will go from 2%, to 3% of every dollar over the $2,000,000-dollar mark. I’m guessing though that no one will really be shedding tears over the fact that those who purchase homes valued at $2,000,000 or more wind up paying more transfer tax, which by the way in Vancouver these days is a “starter home” .. just kidding, sort of.
This change will certainly stimulate things for builders and help new construction sales, primarily outside of the lower mainland when it comes to single family detached homes, as typically it’s not ‘till you hit the Fraser Valley, you can find new homes under $750,000. However, when it comes to condos & townhomes, this change will likely have an impact all over the lower mainland, since these types of properties can be found at prices below $750,000 in various neighborhoods. Generally, throughout the province of BC, this will have a positive impact for new home sales since many regions have new homes below this new threshold.
Unlike the first time home buyer property tax exemption which applies to homes under $475,000 (new or pre-owned) but is only for first time homebuyers (which remains in place & unchanged), anyone can take advantage of this exemption provided as mentioned above, if they are either Canadian Citizens or have their permanent resident status in Canada and are purchasing a new home and it’s under $750,000. The government also announced there will be a tiered reduction in the transfer tax exemption for homes between $750,000 and $800,000, very similar to what happens under the first time home buyer exemption program when homes are over $475,000 but less than $500,000.
Auxilium Mortgage Corp is a BC based mortgage brokerage and our team would welcome the opportunity to assist you with your mortgage needs.
