BC Budget 2011
Last autumn, when the government was preparing Budget 2011, they asked individuals and organizations for input through a province-wide public consultation initiative.
As in previous years, the government’s goal was to provide a process for British Columbians to make proposals and recommendations about the provincial budget and fiscal policy.
The Real Estate Board responded by asking members for ideas. Then the Board’s Government Relations Committee carefully crafted a submission, There’s No Place Like Home – If You Can Afford the Taxes.
This submission contained five recommendations to make housing more affordable:
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Increase the 1% Property Transfer Tax threshold to $525,000 from $200,000, and in expensive markets, like the Lower Mainland, increase it to $700,000.
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Raise the HST New Housing Rebate threshold to $700,000 from $525,000 in expensive markets such as the Lower Mainland.
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Allow HST Input Tax Credits for owners of residential rental accommodations.
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Reinstate the provincial portion of the HST Rebate or Tax Credit for leaky condominium repairs.
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Extend the provincial portion of the HST Rebate or Tax Credit on energy efficient products.
Unfortunately, Budget 2011 didn’t implement any of our recommendations.
Instead, in what Finance Minister Colin Hansen referred to as a “status quo budget,” and a “live within our means” budget, Budget 2011 was created to tide the province over until the new leader and cabinet come in and set out their vision.
While we didn’t expect affordable home ownership to be a key component of the budget, we had hoped it might rank as a priority given that our province has the highest home prices and taxes on home buying in Canada – and given the amount of jobs and spin-offs created by home sales.
But, affordable home ownership didn’t get a mention, which means home buyers are going to continue to be stretched to the limit for at least the next year or two.
How much do taxes add to home buying?
The Property Transfer Tax (PTT) adds $15,884 to the average price of a detached home in Greater Vancouver (estimated at $894,210). While there is a rebate for qualifying first-time buyers, the home must be priced below $425,000 and there is a proportional exemption for homes priced up to $450,000.
The Harmonized Sales Tax on a new home adds 12%, with 7% of that amount being due to harmonization. There is a rebate of up to $26,250 for qualifying homes.
The total: taken together, total taxes on a new home in Vancouver amount to $123,189 – which brings the cost of that $894,210 home to $1,017,399.
However the government does provide rebates and exemptions to property buyers and owners.
Looking to Budget 2012
For Budget 2012, we hope the new Premier sets a strong vision for making property ownership more affordable.
To read the Real Estate Board’s full pre-budget submission, go to www.rebgv.org and see ways to make home ownership more affordable (top right hand side).