British Columbia's Property Transfer Tax: Is It Too Much?
I read a very informative article today about British Columbians and their opinions on the PTT or Property Transfer Tax. It was printed on Wednesday, May 1, 2013 by the Real Estate Board of Greater Vancouver. Did you know that when the PTT was first introduced in 1987 it was meant more as a wealth tax? Only 5% of the homes sold back then had to pay the property transfer tax. Now, the opposite holds true and 96% of homes purchased in BC must pay PTT. The revenue for the BC government generated by the PTT in 2012 was a whopping $780 Million Dollars! Maybe our fat government needs to get their hands out of the Real Estate Cookie Jar?
"Vancouver, BC – In a recent Ipsos Reid opinion poll, 58 per cent of respondents agreed that the Property Transfer Tax (PTT) places an unfair tax burden on home buyers relative to other segments of the population.
Twenty nine per cent disagreed, and 13 per cent had no opinion on the issue. The poll also found that 51 per cent of respondents believe the provincial government should adjust the way the PTT is calculated to reflect price changes in the housing market over time. Of the 854 respondents, 26 per cent did not believe the PTT should be adjusted to reflect inflationary trends in the housing market and 23 per cent had no opinion.
Ipsos Reid conducted the poll on behalf of the Real Estate Board of Greater Vancouver (REBGV). It was conducted online with 854 adult British Columbians responding between April 19 and 24, 2013.
“While the PTT is not top of mind in most people’s daily lives, when the time comes to purchase a home this tax becomes a significant burden for home buyers in BC to shoulder,” says Sandra Wyant, REBGV president.
The province introduced the tax 26 years ago. It was structured to add 1 per cent on the first $200,000 of the purchase price, and 2 per cent on the balance. The government of the day touted the PTT as a wealth tax, as just 5 per cent of homes in Greater Vancouver in 1987 sold for $200,000 or more. Today, the reverse holds true, with 96 per cent of homes in Greater Vancouver selling for more than $200,000. However, the tax’s structure hasn’t changed in nearly three decades.
“The PTT is structured to reflect home prices in the 1980s, not the prices home buyers pay today,” Wyant says. “The fact that it hasn’t been adjusted in 26 years is simply not fair to home buyers and the candidates in this year’s election should address this issue,” Wyant said.
The REBGV is asking candidates if they would support increasing the one per cent threshold to $525,000 from $200,000. This would mean that on a $600,000 home, the PTT would be $6,750, instead of $10,000, saving home buyers $3,250.
The PTT generated $780 million for the provincial government in 2012. This money goes into general revenue to fund public services. It’s paid each time a property changes hands in the development process. When a developer buys raw land, the developer pays the PTT. When a builder buys lots from the developer, the builder pays the PTT. When a home buyer buys a home from the builder, the home buyer pays the PTT. Each time that home is sold, the buyer pays PTT.
Editor’s Note: Ipsos is a global independent market research company.
These are the findings of an online Ipsos Reid poll of 854 adult British Columbians conducted for the Real Estate Board of Greater Vancouver using Ipsos Reid’s national online household panel between April 19 and 24, 2013. These data were statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual BC population according to 2011 Census data. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/- 3.8 percentage points had all British Columbia adults been surveyed. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
The Real Estate Board of Greater Vancouver is a non-partisan association representing 11,000 REALTORS® in Greater Vancouver.
Authorized by the British Columbia Real Estate Association, registered under the Election Act.”
What do you think? Is this tax too burdensome for home buyers? Time to reduce the PTT? Is there an alternative solution or is it true that once a tax is introduced it will likely never get eliminated?