The Property Transfer Tax turning 25 years old

On March 7, 1987, then B. C. Finance Minister Mel Couvelier introduced the Property Transfer Tax ( PTT). At the time, it was touted as a wealth tax that would discourage speculation.

Since then, every time someone moves and buys another home, they pay the tax.

The tax was structured to add one per cent on the first $ 200,000 of a home’s market value at the time of sale and two per cent on the remainder. In 25 years, the one per cent ceiling of $ 200,000 has not changed, while home prices have increased 601 per cent.

In 1987, 95 per cent of homes sold for less than $ 200,000, meaning that just fi ve per cent of all sales had the two per cent portion of the PTT applied.

The average price of a detached home in Greater Vancouver was $ 147,485 in 1987, which resulted in an average PTT payment of $ 1,474.

Today the benchmark price for that same detached home is $ 1.034 million, a price that requires an additional PTT payment of $ 18,069.

“The Property Transfer Tax makes already expensive homes even more expensive in our region and it’s unfair that our government continues to single out home buyers to bear this tax burden,” Rosario Setticasi, president of the Real Estate Board of Greater Vancouver ( REBGV) said.

If the PTT was applied only to the top five per cent of all home sales today, as originally intended, the $ 200,000 threshold would have to be raised to more than $ 1.4 million in Greater Vancouver. Does a $ 200,000 one per cent ceiling still make sense?

Of the 32,390 homes that sold on the Multiple Listing Service ® in Greater Vancouver in 2011, 2.5 per cent, or 839, sold for less than $ 200,000.

While there is a PTT exemption for qualifying fi rst- time buyers of homes priced at less than $ 425,000, and a partial exemption for homes priced up to $ 450,000, homes at these prices are also increasingly

diffi cult to fi nd.

Realtors going to bat for home buyers

Even before the PTT was implemented, the Real Estate Board of Greater Vancouver, the professional association of the more than 11,000 Realtors in the region, has persistently campaigned on behalf of home buyers and sellers against the tax.

“We work together with Realtors across the province, through the BC Real Estate Association, to hammer home to the BC government the message that the PTT makes home buying more expensive,” Setticasi said.

Our action plan:

Each year a submission is sent to the Ministry of Finance about how the PTT increases home prices.

Each year, Realtors meet with MLAS in Victoria to recommend changes to help lessen the tax burden.

Year- round, Realtors meet with MLAS in their neighbourhood offi ces to review the harmful eff ects of the PTT and to recommend changes. Why are home sales good for the economy? Home sales = more jobs and more spin- off s

Each time a home changes hands, the transaction generates $ 42,000 in economic spin- off s and 2.8 jobs. Home buyers hire appraisers, inspectors, movers and landscapers. They buy furniture and fi xtures, fl ooring and appliances.

Every 100 residential sales generates $ 660,000 in provincial taxes, $ 300,000 in federal taxes and $ 32,000 in municipal taxes.

In 2011, in the Greater Vancouver area, 32,390 homes changed hands generating $ 1.36 billion in economic activity and 9,069 jobs.