This article is the second in a five-part series exploring the key issues in BCREA’s election platform, which aims to address the challenges facing BC’s housing market. In this piece, we’ll explore the critical need for housing tax reform and how it can directly impact housing affordability in British Columbia. The BC Real Estate Association (BCREA) has identified housing taxation as one of the key areas that requires immediate attention and reform to alleviate the housing crisis.

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Understanding BC's Housing Tax Burden

British Columbia is known for having some of the highest housing-related taxes in the world. Housing taxes in BC are layered with multiple levies, fees, and duties, which have increased significantly since 2016. According to the BC Budget and Fiscal Plan for 2024/25-2026/27, housing-related taxes bring in well over $2 billion annually for the province. These taxes include:

• Property Transfer Tax (PTT): $1.95 billion annually.
• Speculation and Vacancy Tax (SVT): $90 million annually.
• Flipping Tax: Introduced in January 2025, this tax is expected to generate $43 million by 2026.

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Although these taxes contribute to the province’s revenue, they are having a significant negative impact on housing affordability. In particular, the Property Transfer Tax (PTT) is widely viewed as one of the most burdensome and outdated taxes, having not been indexed to reflect current housing market values or inflation.

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Key Challenges

1. Property Transfer Tax (PTT) and Its Impact on Affordability: The PTT, which was first introduced in 1987, has not been adjusted for inflation or the rising property values over the years. It was initially designed as a wealth tax to curb speculation, but today, 99.5% of property transactions in Greater Vancouver exceed the original threshold of $200,000, which means almost all buyers are subject to the highest tax rates. The median PTT paid per transaction has more than doubled over the past decade, reaching over $11,000 in 2023 .
2. Cumulative Tax Burden: Homebuyers in BC face an overwhelming burden from multiple layers of taxes. In addition to the PTT, buyers are subject to development levies, property taxes, and, in some cases, the Speculation and Vacancy Tax. Combined, these taxes make housing less affordable, especially for first-time buyers and middle-income families.
3. Duplication of Taxes: In some regions, such as Vancouver, the Speculation and Vacancy Tax (SVT) overlaps with similar municipal and federal taxes, creating a complex and burdensome system for property owners. Despite the introduction of these taxes, their effectiveness in reducing housing costs has been minimal, and rents have not significantly dropped.

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BCREA’s Recommendations for Housing Tax Reform

To address the issue of housing affordability, BCREA has proposed several key reforms aimed at simplifying and reducing the tax burden on homebuyers:

1. Comprehensive Review of the Property Transfer Tax (PTT): BCREA is advocating for a systematic review of the PTT. This review would involve consulting with housing sector stakeholders, economists, and policymakers to develop a more balanced tax that reflects the current housing market and the cost of living. One key recommendation is to exempt homes below the average BC home price (currently $959,480) from the PTT entirely. This would provide immediate relief to first-time buyers and families.
2. Indexing the PTT to Inflation and Market Trends: BCREA recommends that the PTT be indexed annually to reflect current housing prices and inflation. This would ensure that homebuyers are not penalized as property values continue to rise. Additionally, the province could simplify the PTT by reducing the number of rates and thresholds, making it easier for buyers to understand and for conveyancers to process.
3. Repeal of the Speculation and Vacancy Tax (SVT): BCREA supports the immediate repeal of the SVT, as it has proven to be ineffective in improving housing affordability. The SVT, introduced to target vacant homes, has seen diminishing returns each year since its introduction, with little impact on lowering rental costs. Many argue that the tax is unfair, especially for residents who earn their income abroad but live and contribute to the local economy in BC.
4. Reevaluate the Flipping Tax: The newly introduced Flipping Tax targets property owners who sell homes within a short period of purchase. BCREA’s analysis suggests that this tax could discourage sellers from listing their homes, further limiting housing supply in an already tight market. BCREA recommends reexamining the tax and considering its unintended consequences on both the resale housing market and new construction.
5. Simplify the Tax System for Homebuyers: To reduce the administrative burden on homebuyers, BCREA advocates for simplifying the reporting processes for the PTT and other housing-related taxes. Streamlining these procedures would make it easier for buyers, conveyancers, and real estate professionals to navigate the tax system.

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The Impact of Housing Tax Reform

Implementing these housing tax reforms could have a dramatic effect on affordability in British Columbia. Reducing the tax burden on homebuyers would free up money for families to invest in other areas of their lives, such as education and retirement savings. Additionally, a simplified tax system would improve transparency, reduce administrative costs, and create a more efficient housing market.

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Conclusion

Housing tax reform is an essential component of addressing the housing crisis in British Columbia. By reforming the Property Transfer Tax, repealing ineffective taxes like the SVT, and simplifying the tax system, BC can make significant strides toward improving housing affordability for its residents. BCREA’s proposed reforms offer a clear path forward, providing relief for homebuyers and fostering a more equitable housing market. This article is part of BCREA’s ongoing election platform series, focusing on the key issues that need attention in BC’s housing market. Stay tuned for the next article in our series, which will cover Short-Term Rentals and their impact on housing supply.

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Sources:

• BCREA