| |
 Print
Improve Housing Affordability - New Measures
2-22-2016
Newly built homes priced up to $750,000 will be fully exempt from the property transfer tax when bought by Canadian citizens or permanent residents as a principal residence and lived-in for a full year. The measure aims to assist purchasers and help stimulate the construction of moderately priced homes. The exemption will save a purchaser up to $13,000, and provide an estimated $75 million in property transfer tax relief for new construction in 2016-17.
Partial exemptions are available for new housing valued up to $800,000. Newly constructed housing eligible for the exemption includes the first purchase of a new housing unit or a newly subdivided unit. Those who buy land and build homes to be used as their principal residence can also apply to receive a refund of property transfer tax rather than an exemption at the time of registration, if they complete construction and move in within a year of purchase. The program will be available to buyers regardless of how long they have lived in British Columbia, meaning those who move to B.C. to take jobs, start companies and build their lives here will also benefit. The exemption will be available to first-time buyers and previous property owners alike. The New Housing exemption will be largely funded by increasing the property transfer tax rate to 3% on the portion of fair market value over $2 million. The 1% rate on the first $200,000 of property value and the 2% rate on the value of a property between $200,000 and $2 million continue to apply. The new higher rate is expected to raise an additional $75 million each year — the approximate cost of the New Housing exemption.
Creating new housing supply is critical to improving housing affordability in B.C.’s real estate market. Relatively high housing prices in B.C., and particularly in the Lower Mainland, are driven by increased demand that has resulted from B.C.’s economic and population growth, as well as constrained geography and a lack of available land. The New Housing exemption is expected to benefit owners of about 22,000 new homes in 2016, many of which will be constructed in the Vancouver area.
New MSP Premium Rate Structure
Changes to Medical Services Plan (MSP) premiums and enhancements to premium assistance will improve fairness and help B.C. families with the cost of living. All changes will take effect Jan. 1, 2017. With these changes, the calculation of MSP premiums will no longer include children. Instead, the monthly rate for each household will be based only on the number of adults. For example, a household with one parent and two children will be charged the single adult rate, rather than the three-person rate they pay today — saving this family $864 per year. A single adult will pay $78 per month.
The Province will invest an additional $70 million annually to enhance premium assistance, helping more lower-income families, seniors and individuals qualify for reduced rates. Families and individuals receiving premium assistance who currently pay partial premiums will see their premiums reduced, and additional households earning above the current premium assistance threshold will qualify for assistance.
For example, a couple with two children earning up to $51,000 may qualify for assistance, and a single parent with two children earning up to $48,000 may qualify for assistance. With these changes, an additional 335,000 people will see their premiums reduced, including 70,000 single parent families. An additional 45,000 people will no longer pay MSP premiums at all. Once the changes have been implemented, nearly two million British Columbians will pay no premiums at all.
Footnotes: Footnotes: This column is presented as a general source of information only and is not intended as a solicitation for business. It is always recommended that you consult a qualified tax professional beforeembarking on any of the suggestions outlined above. Mohammed Yasin, CPA,CGA, is the principal of M. Yasin & Co. Inc., Certified General Accountants and has offices in Vancouver & Surrey,B.C. For more information on this topic or any other taxation matters, please contact taxes@alameen.ca.
|