When you purchase Real Estate in Victoria BC there is a Property Transfer Tax (PTT) applicable. This tax is 1% on the first $200,000 and 2% on the balance of the sale price. Your lawyer collects this tax at the time of closing and forwards the funds to our beloved Provincial Government. That is the last you see of this money, you don’t even get a thank you note or anything.
To put the above numbers in perspective; if you purchase a home for $500,000 the total you would pay in PTT would be $8,000. Now if this was a new home you would also have to pay another $25,000 in GST to the federal government, calculated at 5% as of the 1st of January 2008.
The Property Transfer Tax will take about $925 million from purchasers’ pockets this year, according to provincial government budget documents. This is absurd in our opinion. It would be very interesting to know what they do with almost One Billion Dollars?
In a market where affordability is already an issue, we believe the provincial government can take steps to ease the burden of the PTT, if not eliminate it entirely. There was actually a study done that showed that if the PTT was abolished the government would make more money by stimulating the economy.
Earlier this year the government increased the exemption threshold for first-time buyers to $375,000 throughout the province. This was on the recommendation of British Columbia Real Estate Association (BCREA) and BC REALTORS®
BCREA’s recommendations to the provincial government is to work toward elimination of the PTT by:
- Increasing the ceiling for the one per cent portion of the tax to $300,000 from $200,000.
- Indexing the price exemption threshold to annual changes in the median Multiple Listing Service® home price by provincial development regions.
These are just some of the things the government could do to stimulate the economy further. Do you have any suggestions what the government can do to ease the tax burden and to stimulate the real estate market further?
What about the US Subprime? Many people are concerned about the US Subprime and if it will effect us. We don’t think it will. You can check out one of our previous blogs.
If you have any comments or predictions about the prices in Victoria or British Columbia or if you have questions about Victoria Real Estate in General, you can contact us anytime.
Anders Treiberg, Associate Broker, REALTOR®
Properties in Victoria Professionals – Royal LePage Coast Capital.All Articles More Like This