Thursday, April 28, 2005
Property Transfer Tax: some Economic Considerations
Every time a transfer of title takes place in British Columbia, a registration tax applies to all transferees who register transfers of properties at the Land Title Office. This registration tax is known as the Property Transfer Tax (PTT).and amounts to one percent (1%) of the first $200,000 of the purchase price and two percent (2%) of the balance above. There are exemptions to the rule, most notably the one in effect as of February 16, 2005 wherein PTT is not applicable on transfers of properties whose consideration (purchase price) in Greater Vancouver is less than or up to $325,000, provided other conditions are met.
Studies have shown that British Columbians are facing an affordability crisis: the Province continues to have some of the highest housing prices in Canada during a time of record low mortgage rates and a fairly good supply of homes for sale. Eliminating the PTT entirely would be of great help in reducing this affordability crisis. It is estimated that the PTT prevents approximately 10,300 families and individuals from buying an average-priced residential property.
While the tax brings in some CAD $216 million revenue annually into the coffins of the Provincial Government, studies have shown that eliminating the PTT would:
- cause MLS sales and housing starts to increase by 9,000 units approximately;
- create 20,640 person years of employment;
- increase GDP by $1,274;
- lead to a stimulated housing economy and accompanying revenue of $357 per capita approximately.
All beneficial effects that should not be ignored by our Provincial Government. For a complete list of PTT exemption requirements feel free to send me an e-mail at luigi@dccnet.com .
Luigi Frascati
Real Estate Chronicle
